Question

     

You are given the following information about Silk Company's inventory for the month of April.

Purchase			Sales
Date	Units	Cost per unit $	Date	Units
April 1	400	4.00	April 2	300
April 10	1,300	4.10	April 11	1,000
April 25	1,200	4.50	April 29	1,400
April 27	600	4.75

Instruction: Silk uses weighted average perpetual. (a). Calculate the cost of ending inventory and cost of goods sold. (Note: Round the weighted average cost per unit to two decimal places.). Show all relevant calculations.

(b). Show the journal entries for the sale on 29 April if the sales price per unit is $7.5. The sales was for cash.

Answer 1

(a)
	Average Cost - Perpetual
		Purchases		Cost of Goods Sold			Inventory Balance
	Perpetual Average	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory Value
	April 1						400	$4.00	$1,600
	April 2			300	$4.00	$1,200	100	$4.00	$400
	April 10	1,300	$4.10				100	$4.00	$400
							1,300	$4.10	$5,330
	Average cost						1,400	$4.09	$5,730
	April 11			1,000	$4.09	$4,090	400	$4.09	$1,636
	April 25	1,200	$4.50				400	$4.09	$1,636
	April 27	600	$4.75				1,200	$4.50	$5,400
							600	$4.75	$2,850
	Average cost						2,200	$4.49	$9,886
	April 29			1,400	$4.49	$6,286	800	$4.49	$3,592
	Average cost			2,700		$11,576	800	$4.49	$3,592
						COGS			EI
(b)
Date	General Journal	Debit	Credit
April 29	Cash	10,500
	Sales		10,500
	Cost of goods sold	6,286
	Inventory		6,286