Question

CHO Company was formed on December 1, 2009. The following information is available from Jones's inventory record for Product X.

                                                                                                                    Units       Unit Cost

             January 1, 2010 (beginning inventory)                                       1,600     $18.00

             Purchases:

                   January 5, 2010                                                                      2,600     $20.00

                   January 25, 2010                                                                    2,400     $21.00

                   February 16, 2010                                                                  1,000     $22.00

                   March 15, 2010                                                                      1,800     $23.00

A physical inventory on March 31, 2010, shows 2,500 units on hand.

Prepare schedules to compute the ending inventory at March 31, 2010, using Weighted-average.

Answer 1

Answer

• Working
  --Units available for sale = 9400 units
  --Units in ending inventory = 2500 units
  --Units sold = 9400 – 2500 = 6900 units
• Schedules asked, has been provided in two formats {weighted average cost has been rounded to two decimal place)

--Alternative 1

Average Method	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	1600	$                18.00	$                      28,800.00
Purchases:	0	$                       -	$                                     -
05-Jan	2600	$                20.00	$                      52,000.00
25-Jan	2400	$                21.00	$                      50,400.00
16-Feb	1000	$                22.00	$                      22,000.00
15-Mar	1800	$                23.00	$                      41,400.00
TOTAL	9400	$              20.70 [$194600 / 9400]	$                    194,600.00	6900	$          20.70	$            142,830.00	2500	$            20.70	$          51,750.00

--Alternative 2

Weighted Average (Periodic)	Units	Cost per unit	Total
Beginning Inventory	1600	$            18.00	$     28,800.00
Purchases:
05-Jan	2600	$            20.00	$     52,000.00
25-Jan	2400	$            21.00	$     50,400.00
16-Feb	1000	$            22.00	$     22,000.00
15-Mar	1800	$            23.00	$     41,400.00
Total Purchases	7800		$   165,800.00
Goods Available for Sales	9400		$   194,600.00
Weighted Average cost per unit		$          20.70 [$194600 / 9400 units]
Cost of Goods Sold	6900	$          20.70	$   142,830.00
Ending Inventory	2500	$          20.70	$     51,750.00