Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
ISBN: 9781337119207



Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
ISBN: 9781337119207
Textbook Problem

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 4,000 units at $20
  Apr. 19 Sale 2,500 units
  June 30 Purchase 6,000 units at $24
  Sept. 2 Sale 4,500 units
Nov. 15   Purchase 1,000 units at $25

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5.

To determine

Perpetual Inventory System:

Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases, and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.

Weighted -average cost method:

Under weighted average cost method, the company calculates a new average cost after every purchase is made. It is determined by dividing the cost of goods available for sale by the units on hand.

To determine: cost of merchandise sold for each sale after each sale as on December 31.


Calculate the cost of merchandise sold and ending inventory. (Weighted average method)

Working Notes:

Calculate the weighted average unit cost after June 30 purchases

Weighted average method
Quantity Unit cost Total cost of inventory in hand
1,500 units $20 30,000
6,000 units $24 144,000
7,500 units   $ 174,000

Weighted average unit cost = Total cost of inventory in handTotal quantity=$174,0007,500=$23

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How are inflation and unemployment related in the short run?

Principles of Macroeconomics (MindTap Course List)

CORPORATE VALUATION Smith Technologies is expected to generate 150 million in free cash flow next year, and FCF...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)