Question

Jammer Company uses a perpetual weighted average inventory system and reports the following:

August 2	Purchase	5 units at $9.00 per unit.
August 18	Purchase	7 units at $11.00 per unit.
August 29	Sale	10 units.
August 31	Purchase	10 units at $12.00 per unit.

What is the per-unit value of ending inventory on August 31?

On January 1, Eastern College received $1,320,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. Assuming the college prepares adjustments monthly, what amount of tuition revenue should the college recognize on February 28?

The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Retained earnings account?

Total revenues	$	150,000
Total expenses		72,000
Retained earnings		96,000
Dividends		18,000

A company uses the periodic inventory system and had the following activity during the current monthly period.

November 1:	Beginning inventory	111 Units @ $30
November 5:	Purchased	111 Units @ $22
November 8:	Purchased	61 Units @ $30
November 16:	Sold	170 Units @ $100
November 19:	Purchased	70 Units @ $30

Using the weighted-average inventory method, the company's ending inventory would be:

Use the following information as of December 31 to determine equity. Cash $ 67,000 Buildings 185,000 Equipment 216,000 Liabilities 151,000

A company uses the periodic inventory system and had the following activity during the current monthly period. November 1: Beginning inventory 111 Units @ $30 November 5: Purchased 111 Units @ $22 November 8: Purchased 61 Units @ $30 November 16: Sold 170 Units @ $100 November 19: Purchased 70 Units @ $30 Using the weighted-average inventory method, the company's ending inventory would be:

Strods Company reported the following purchases and sales of its only product. Strods uses a periodic inventory system. Determine the cost assigned to ending inventory using LIFO. Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 340 units @ $19 5 Purchase 315 units @ $21 10 Sales 235 units @ $29 15 Purchase 195 units @ $22 24 Sales

The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Retained earnings account? Total revenues $ 150,000 Total expenses 72,000 Retained earnings 96,000 Dividends 18,000

Answer 1

1. Under Weighted average cost inventory method, the unit cost is calculated by dividing the cost of goods available for sale with number of units available. The per-unit value of ending inventory is also determined in this manner.

Under weighted average cost method,
The per unit value after 2 purchases will be,
5 units at $9 per unit = 5 × $9 = $45
7 units at $11 per unit = 7 × $11 = $77
Per unit value = Total cost / Total units = ($45 + $77) / 12 = $122 / 12 = $10.16
Inventory available after selling 10 units (10 units @ $10.16 per units = $101.67:
2 units @ $10.16 per unit = $21.33
The per unit value after 10 units purchases will be,
10 units @ $12 = 10 × $12 = $120
2 units @ $10.16 per unit = $21.33

Per-unit value of ending inventory on August 31:

Per unit value = Total cost / Total units = ($120 + $21.33) / 12 = $141.33 / 12 = $11.78

Hence, the per-unit value of ending inventory on August 31 is $11.78

2. Unearned revenue is the liability of an organisation when the customer is making payments in advance for any products or services. It arises when the service for the revenue received is to be performed in a future period.
Here, the unearned tution and fees for the four month semester is amounted $1,320,000.

The calculation of amount of tuition revenue the college should recognize on February 28 is given below:

Per month tution revenue = Total Tuition revenue received for the semester ÷ Number of months in the semester

= $1,320,000 ÷ 4

= $330,000

Since the amount of tuition revenue is given for four months and we are calculating the revenue for 1 month.

Thus, $330,000 is the amount of tuition revenue that the college should recognize on February 28.

3. Retained earnings is the amount available for the business for its development and future expansion activities. It is often used for paying out cash dividend to shareholders. At the end of the accounting period the accounts of revenue and expenses are closed and any profit which is the excess of revenue over expenses is added to the existing balance of retained earnings. Any loss which is excess of expenses over revenue is deducted from retained earnings. Any dividend paid from retained earnings is also deducted.
Here, the adjusted trial balance of the Harris Vacation Rental Agency shows a retained earnings balance of $96,000.
Therefore,
Closing retained earnings = Retained earnings + Profit (Revenue-expense) - Dividends = $96,000 + $78,000
($150,000 - $72,000) - $18,000 = $156,000

Hence, After closing entries are posted, the balance in the Retained earnings account is $156,000.

4. Under Weighted average cost inventory method, the unit cost is calculated by dividing the cost of goods available for sale with number of units available. The value of ending inventory is also determined in this manner.

Under weighted average cost method,
First calculate the weighted average cost for all units the company purchased including opening balance:

(111 units × $30) + (111 Units × $22) + (61 Units × $30) + (70 Units × $30) = $3,330 + $2,442 + $1,830 + $2,100 = $9,702

Number of units purchased including opening balance = 111 + 111 + 61 + 70 = 353 units

Weighted average cost per unit = $9,702 / 353 units = $27.48

Number of units left in inventory at the end = 353 units - 170 units (sold) = 183 units

Each unit is considered to be worth $27.48. So,

183 units × $27.48 = $5,029

Using the weighted average inventory method, the company's ending inventory would be reported at $5,029.