# Calculate a) cost of goods sold, b) ending inventory, and c) gross margin for B76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for weighted average (AVG).

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 10, Problem 11PB
Textbook Problem
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## Calculate a) cost of goods sold, b) ending inventory, and c) gross margin for B76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for weighted average (AVG).

To determine

Introduction:

Weighted Average Method is used to calculated cost of goods sold. In this method, cost allocated to sold units is computed by taking weighted average cost of the goods purchased.

To compute:

The COGS, ending inventory and gross margin under three different cost allocation methods using perpetual inventory system. Also, show calculations for Weighted Average Method.

### Explanation of Solution

Table showing COGS, ending inventory, and gross margin under three different cost allocation methods using perpetual inventory system:

 Particulars LIFO ($) FIFO ($) Weighted Average ($) COGS2 141,250 138,475 139,757 Ending Inventory1 37,000 39,775 38,492 Gross Margin3 149,335 152,110 150,828 Table (1) Working Notes: 1. Computation of Closing Inventory:  Particulars Amount ($) Closing inventory after sale-1 (270 Units×$200) 54,000 Closing inventory after sale-2 (((270+250−275)Units)×$202.4) 49,589 Closing inventory after sale-3 (((245+200−260)Units)×$208.1) 38,492 Table (2) 2. Computation of COGS:  Particulars Amount ($) COGS for Sales 1 (150 Units×$200) 30,000 COGS for Sales (275 Units×$202.4) 55,661 COGS for Sales 3 (260 Units×\$208

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