Question

Weighted Average Cost Method with Perpetual Inventory

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:

Date		Transaction	Number of Units		Per Unit		Total
Jan. 1		Inventory	7,500		$75.00		$562,500
10		Purchase	22,500		85.00		1,912,500
28		Sale	11,250		150.00		1,687,500
30		Sale	3,750		150.00		562,500
Feb. 5		Sale	1,500		150.00		225,000
10		Purchase	54,000		87.50		4,725,000
16		Sale	27,000		160.00		4,320,000
28		Sale	25,500		160.00		4,080,000
Mar. 5		Purchase	45,000		89.50		4,027,500
14		Sale	30,000		160.00		4,800,000
25		Purchase	7,500		90.00		675,000
30		Sale	26,250		160.00		4,200,000

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method. Round unit cost to two decimal places, if necessary.

Midnight Supplies Schedule of Cost of Merchandise Sold Weighted Average Cost Method For the three months ended March 31
	Purchases			Cost of Merchandise Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1								$	$
Jan. 10		$	$
Jan. 28					$	$
Jan. 30
Feb. 5
Feb. 10
Feb. 16
Feb. 28
Mar. 5
Mar. 14
Mar. 25
Mar. 30
Mar. 31	Balances					$			$

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.

Total sales	$
Total cost of merchandise sold	$
Gross profit from sales	$

3. Determine the ending inventory cost as of March 31.
$

Answer 1

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL AVERAGE METHOD
	RECIEPTS			COST OF GOODS SOLD			BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
1-Jan							7500	75	562500
10-Jan	22500	85	1912500				7500	75	562500
							22500	85	1912500
Average							30000	82.5	2475000
28-Jan				11250	82.5	928125	18750	82.5	1546875
30-Jan				3750	82.5	309375	15000	82.5	1237500
5-Feb				1500	82.5	123750	13500	82.5	1113750
10-Feb	54000	87.5	4725000				13500	82.5	1113750
							54000	87.5	4725000
Average							67500	86.5	5838750
16-Feb				27000	86.5	2335500	40500	86.5	3503250
28-Feb				25500	86.5	2205750	15000	86.5	1297500
5-Mar	45000	89.5	4027500				15000	86.5	1297500
							45000	89.5	4027500
Average							60000	88.75	5325000
14-Mar				30000	88.75	2662500	30000	88.75	2622500
25-Mar	7500	90	675000				30000	88.75	2662500
							7500	90	675000
Average							37500	89	3337500
30-Mar				26250	89	2336250	11250	89	1001250
TOTAL	129000		1134000	125250		10901250	11250		1001250
Total sales (1687500+562500+225000+4320000+4080000+4800000+4200000)								19875000
Sales revenue			19875000
Less: Cost of g oods sold			10901250
Gross profit			8973750
Ending inventory:			1001250