Question

Towing Company employs a periodic inventory system and sells its inventory
to customers for $34 per unit. Towing Company had the following inventory
information available for the month of May:

May 1    Beginning inventory 2,200 units @ $17 cost per unit
May 8    Sold 1,700 units
May 13   Purchased 1,800 units @ $13 cost per unit
May 18   Sold 1,600 units
May 21   Purchased 1,300 units @ $23 cost per unit
May 22   Purchased 1,100 units @ $15 cost per unit 
May 28   Sold 1,300 units
May 30   Purchased 1,600 units @ $10 cost per unit

During May, Towing Company reported operating expenses of $49,000 and had
an income tax rate of 32%.

Calculate the dollar amount of ending inventory shown on Towing Company's
May 31 balance sheet using the weighted average method.

Answer 1

Correct Answer: Value Of Ending Inventory $ 52,360.00

Solution :

	Units	Cost per unit	value
Beginning Balance	2200	$                17.00	$      37,400.00
Purchases
13-May	1800	$                13.00	$      23,400.00
21-May	1300	$                23.00	$     29,900.00
22-May	1100	$                15.00	$      16,500.00
30-May	1600	$                10.00	$      16,000.00
Total units purchased in the month	8000		$ 1,23,200.00

Average Cost of Inventory
Units	(A)	8000
Total Cost	(B)	$    1,23,200.00
Average Cost	(C=B/A)	$                15.40

Weighted Average method
Total Units Available for sale		8000
Units Sold	1700+1300+1600=4600	4600
Closing Stock in Units		3400
Valuation
Ending Inventory	3400	@	$              15.40	$         52,360.00
Value Of Ending Inventory				$        52,360.00