Question

Chapter 06 Homework

Hide or show questions

1. Weighted Average Cost Method with Perpetual Inventory

   The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are as follows:

   Date		Transaction	Number of Units		Per Unit		Total
   Apr. 3		Inventory	25		$1,200		$30,000
   8		Purchase	75		1,240		93,000
   11		Sale	40		2,000		80,000
   30		Sale	30		2,000		60,000
   May 8		Purchase	60		1,260		75,600
   10		Sale	50		2,000		100,000
   19		Sale	20		2,000		40,000
   28		Purchase	80		1,260		100,800
   June 5		Sale	40		2,250		90,000
   16		Sale	25		2,250		56,250
   21		Purchase	35		1,264		44,240
   28		Sale	44		2,250		99,000

   Required:

   1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method.

   Dunne Co. Schedule of Cost of Goods Sold Weighted Average Cost Method For the Three Months Ended June 30
   	Purchases			Cost of Goods Sold			Inventory
   Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
   Apr. 3								$	$
   Apr. 8		$	$
   Apr. 11					$	$
   Apr. 30
   May 8
   May 10
   May 19
   May 28
   June 5
   June 16
   June 21
   June 28
   June 30	Balances					$			$

   2. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period.

   Total sales	$
   Total cost of goods sold	$
   Gross profit	$

   3. Determine the ending inventory cost on June 30.
   $

   Feedback

   1. When the perpetual inventory system is used, revenue is recorded each time a sale is made along with an entry to record the cost of the goods sold. Under the weighted average method the average unit cost must be determined after each purchase by dividing the total of cost of goods on hand by the total units on hand. The cost of merchandise goods sold is computed multiplying the average unit cost on the date of sales by the units sold. The inventory balance after a sale is computed by multiplying the average unit cost by the units on hand.

   2. Total sales are obtained by taking the number of units sold times their sale prices for all sales and adding these amounts together. The total cost of goods sold can be obtained by adding the weighted average costs in the perpetual inventory record. Sales minus cost of goods sold equals gross profit.

   3. The ending inventory cost can be taken from the perpetual inventory record in Part (1).

Check My Work

• Previous

Answer 1