Question

Weighted Average Cost Flow Method Under Perpetual Inventory System

The following units of a particular item were available for sale during the calendar year:
Jan. 1    Inventory    30,000 units at $30.00
Mar. 18    Sale    24,000 units
May 2    Purchase    54,000 units at $31.00
Aug. 9    Sale    45,000 units
Oct. 20    Purchase    21,000 units at $32.10

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

Answer 1

Ans.	Statement of weighted average cost flow method under perpetual inventory system:
	Date	Purchase			Sale			Balance
		Unit	Unit Cost	Total	Unit	Unit Cost	Total	Unit	Unit Cost	Total
	Jan.1	30,000	30	900,000				30,000	30	900,000
	Mar.18				24,000	30	720,000	6,000	30	180,000
	May.2	54,000	31	1,674,000				60,000	30.9	1,854,000
	Aug.9				45,000	30.9	1,390,500	15,000	30.9	463,500
	Oct.20	21,000	32.1	674,100				36,000	31.6	1,137,600
	Therefore,
	i)	Cost of mechandise sold for each sale:
			Amt. ($)
		March.18	720,000
		August.9	1,390,500
	ii)	Inventory balance after each sale:
			Amt. ($)
		March.18	180,000
		August.9	463,500