Question

Hatchet Corporation sells one product (using the periodic system of inventory) and had the following inventory transactions during the current month: Beginning Inventory 200 units costing $7 each Purchase on the 5th 600 units costing $8 each Purchase on the 17th 400 units costing $10 each Units sold during the month 900 units at a retail price of $15 each Answer the following questions in the space below. Calculate the cost of goods sold during the month using the Last-In-First-Out method of inventory allocation. Calculate the ending inventory balance (in dollars) using the Weighted-Average method of inventory allocation.

Answer 1

using the periodic system of inventory

Calculate the cost of goods sold during the month using the Last-In-First-Out method of inventory allocation.

Date	Units	Cost	Total cost
Beginning	200	$7	$1400
5th	600	8	4800
17th	400	10	4000
Goods available for sales	1200		$10200
Cost of goods sold
From 17th layer	400	10	4000
From 5th layer	500	8	4000
Cost of goods sold			$8000

Calculate the ending inventory balance (in dollars) using the Weighted-Average method of inventory allocation.

Ending inventory units = Goods available for sales - Sold units

Ending inventory units = 1200 - 900 = 300 units

Date	Units	Cost	Total cost
Beginning	200	7	$1400
5th	600	8	4800
17th	400	10	4000
Total	1200		$10200
Average cost per units	10200 / 1200	= $8.5
	Units	Average cost per units	Total cost
Ending inventory balance	300	8.5	$2550