Question

Solve the follwing Problem

Weighted Average Cost Method with Perpetual Inventory

The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period 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 goods 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. Round all total cost amounts to the nearest dollar.

Midnight Supplies Schedule of Cost of Goods Sold Weighted Average Cost Method For the Three Months Ended March 31
	Purchases			Cost of Goods 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 goods sold, and the gross profit from sales for the period.

Total sales	$
Total cost of goods sold	$
Gross profit	$

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

Answer 1

Ans.		Purchases			Cost of Goods sold			Inventory
	Date	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost
	Jan.1							7500	75.00	562500
	10-Jan	22500	85	1912500				30000	82.50	2475000
	28-Jan				11250	82.5	928125	18750	82.50	1546875
	30-Jan				3750	82.5	309375	15000	82.50	1237500
	5-Feb				1500	82.5	123750	13500	82.50	1113750
	10-Feb	54000	87.5	4725000				67500	86.50	5838750
	16-Feb				27000	86.5	2335500	40500	86.50	3503250
	28-Feb				25500	86.5	2205750	15000	86.50	1297500
	5-Mar	45000	89.5	4027500				60000	88.75	5325000
	14-Mar				30000	88.75	2662500	30000	88.75	2662500
	25-Mar	7500	90	675000				37500	89	3337500
	30-Mar				26250	89	2336250	11250	89	1001250
	31-Mar	Balances			Cost of merch. Sold		10901250	Ending inventory		1001250
		Weighted average cost per unit   =   Total cost of inventory / Quantity of inventory
		Unit cost of goods sold is same as the unit cost of previous balance.
	Jan.1		75
	10-Jan		(562500+1912500) / (7500+22500)			82.5
	10-Feb		(1113750+4725000) / (13500+54000)			86.5
	5-Mar		(1297500+4027500) / (15000+45000)			88.75
	25-Mar		(2662500+675000) / (30000+7500)			89
Ans.2	Total sales		19875000
	Less: cost of goods sold		-10901250
	Gross profit		8973750
	*Calculation of total sales :
	Date
	28-Jan	11250	150	1687500
	30-Jan	3750	150	562500
	5-Feb	1500	150	225000
	16-Feb	27000	160	4320000
	28-Feb	25500	160	4080000
	14-Mar	30000	160	4800000
	30-Mar	26250	160	4200000
	Total Sales			19875000
Ans.3	Cost of Ending Inventory   =		1001250