Question

XYZ Company reports the following initial balance and subsequent purchase of inventory. Assume that 2,000 units were sold during the year. Compute the costs of goods sold and balance of inventory for the year on the year-end balance sheet under the weighted average inventory costing methods. Inventory balance at beginning of year 1,400 units @ $150 each 210,000 inventory purchased during the year 800 units @ $180 each 144,000 Cost of goods available for sale during the year 2,200 units 354,000

A. 321,818; 32,182

B. 318,000; 36,000

C. 324,000; 30,000

D. 300,000; 54,000

Answer 1

Compute per unit cost of goods available for sale, using the equation as shown below:

Per unit cost = Cost of goods available for sales/ Units

                     = $354,000/ 2,200 units

                     = $160.909090909

Hence, per unit cost of good available for sale is $160.909090909.

Compute the cost of goods sold, using the equation as shown below:

Cost of goods sold = Units sold*Per unit cost of goods available for sale

                               = 2,000 units*$160.909090909

                               = $321,818.181818

Hence, the cost of goods sold is $321,818.

Compute the closing inventory balance, using the equation as shown below:

Closing inventory = Cost of goods available for sales – Cost of good sold

                              = $354,000 - $321,818.181818

                              = $32,181.818182

Hence, the closing inventory balance is $32,182.