Question

Bridgeport Inc.’s inventory for the month of November was as follows:

Date			Description		Units			Unit Cost
Nov.	1		Beginning inventory		100			$39
	4		Purchase		500			42
	11		Sale		(450	)
	16		Purchase		750			45
	20		Sale		(800	)
	27		Purchase		600			46

(a)

Calculate the ending inventory and cost of goods sold using the average cost formula in (1) a perpetual inventory system, and (2) a periodic inventory system. (Round answers to 2 decimal places, e.g. 1.25.)

Answer 1

Ans. A 1	Average cost (Perpetual)
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	01-Nov	100	$39.00	$3,900				100	$39.00	$3,900.00
	04-Nov	500	$42.00	$21,000				600	$41.50	$24,900.00
	11-Nov				450	$41.50	$18,675.00	150	$41.50	$6,225.00
	16-Nov	750	$45.00	$33,750				900	$44.42	$39,975.00
	20-Nov				800	$44.42	$35,533.33	100	$44.42	$4,441.67
	27-Nov	600	$46.00	$27,600				700	$45.77	$32,041.67
	Total				Cost of goods sold		$54,208.33	Cost of Ending inventory		$32,041.67
	*Weighted average rate is calculated by using the formula of (Total available balance / Total units available).
Ans. A 2	Available for sale
	Date		Units	Rate	Total
	01-Nov		100	$39.00	$3,900
	04-Nov		500	$42.00	$21,000
	16-Nov		750	$45.00	$33,750
	27-Nov		600	$46.00	$27,600
	Cost of goods available for sale		1950		$86,250
	Total units sold (450 + 800)   =   1,250 units
	Average cost per unit =   Total cost of goods available for sale / Total units available
	$86,250 / 1,950
	$44.23		per unit
	Cost of goods sold   =   No. of units sold * Average cost per unit
	1,250 * $44.23
	$55,287.50
	Ending inventory = Total cost of goods available for sale -   Cost of goods sold
	$86,250 - $55,287.50
	$30,962.50