Weighted Average Cost Flow Method Under Perpetual Inventory SystemThe following units of a particular item were available for sale during the calendar year:Jan. 1Inventory30,000units at $30.00Mar. 18Sale24,000unitsMay 2Purchase54,000units at $31.00Aug. 9Sale45,000unitsOct. 20Purchase21,000units at $32.10The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

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Asked Oct 6, 2019
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Weighted Average Cost Flow Method Under Perpetual Inventory System

The following units of a particular item were available for sale during the calendar year:

Jan. 1 Inventory 30,000 units at $30.00
Mar. 18 Sale 24,000 units
May 2 Purchase 54,000 units at $31.00
Aug. 9 Sale 45,000 units
Oct. 20 Purchase 21,000 units at $32.10

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

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Expert Answer

Step 1

Inventory valuation can be done under different methods like FIFO,LIFO, Weighted Average.

To ascertain the weighted average cost per unit the Cost of goods available for sale are divided by the number of goods available for sale.

As Exhibit 5 is not provided in the question, the solution is prepared based on the generally followed format.

Step 2

Inventory Valuatio...

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C D E E G Н 15 Inventory Valuation under Weighted Average Method 16 17 Particulars Cost of Goods available Cost of Goods Sold Balance Amount Units 30000 Amount J19 K19 units amount D19 E19 p.u 18 p.u Units p.u 19 1 30000 30 30 20 2 24000 30 G20*H20 19-G20 -J20 D21 J22+ J21 |23-G24 J24 -D25 30 120* K20 = K21 " J21 - K22"J22 L22+L21 ЕK20 -E21 L23/123 21 3 54000 31 D21 E21 22 23 45000 -G24 *H24 -К23 |ЕK24 - E25 24 4 25 5 30.9 - 124 * K24 - 125 K25 21000 32.1 D25 E25 J26 K26 26 |L27/127 L26+ L25 J26+ J25 27

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