Question

In: Accounting

The following units of an inventory item were available for sale during the year: Beginning inventory...

The following units of an inventory item were available for sale during the year:

Beginning inventory 7 units at $52

First purchase 15 units at $54

Second purchase 28 units at $55 T

hird purchase 16 units at $57

The firm uses the periodic inventory system. During the year, 26 units of the item were sold.

The value of ending inventory rounded to the nearest dollar using average cost is (Round average cost per unit to three decimal place.)

a.$1,462

b.$1,390

c.$2,198

d.$1,352

Solutions

Expert Solution

Units Cost Per unit Units*Cost per unit
Beginning Inventory 7 $                  52 $                              364
First Purchase 15 $                  54 $                              810
Second Purchase 28 $                  55 $                          1,540
Third purchase 16 $                  57 $                              912
Total 66 $                          3,626
Average Cost per unit = $3626/66 units
$            54.94 per unit
Ending inventory = 66 units -26 units sold
=40 units
Endding inventory = 40 units * $54.94 per unit
$                                 2,198
Correct Option: C

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