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	4,000 units at $40
Apr. 19	Sale	2,500 units
June 30	Purchase	4,500 units at $44
Sept. 2	Sale	5,000 units
Nov. 15	Purchase	2,000 units at $46

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5.

Schedule of Cost of Goods Sold Weighted Average Cost Flow Method
	Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1							-	-	-
Apr. 19				-	-	-	-	-	-
June 30	-	-	-				-	-	-
Sept. 2				-	-	-	-	-	-
Nov. 15	-	-	-				-	-	-
Dec. 31	Balances					-	-	-	-

Answer 1

Correct Answer:

Schedule of cost of goods sold
Weighted Average cost flow method
Date	Goods Purchased			Cost of Goods Sold			Inventory Balance
	# of Units	Cost Per Unit	Cost of Goods Available for sale	# of Units Sold	Cost per Unit	Cost of Goods Sold	# of Units	Cost per Unit	Inventory Balance
01-Jan							4000	$    40.00	$   1,60,000.00
19-Apr				2500	$            40.00	$ 1,00,000.00	1500	$    40.00	$      60,000.00
30-Jun	4500	$                      44.00	$        1,98,000				6000	$    43.00	$   2,58,000.00
02-Sep				5000	$            43.00	$ 2,15,000.00	1000	$    43.00	$      43,000.00
15-Nov	2000	$                      46.00	$      92,000.00				3000	$    45.00	$   1,35,000.00
31-Dec Balance				7500		$ 3,15,000.00	3000	$    45.00	$   1,35,000.00

Working:

Moving average cost
	Inventory balance	Total cost	Average cost for each units
01-Jan	$ 4,000.00	$      1,60,000	$             40.00
19-Apr	$ 1,500.00	$          60,000	$             40.00
30-Jun	$ 6,000.00	$      2,58,000	$             43.00
02-Sep	$ 1,000.00	$    43,000.00	$             43.00
15-Nov	$ 3,000.00	$      1,35,000	$             45.00

End of Answer.

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