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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under average cost at April 30? ( Note: Use four decimal places for per-unit calculations and round to the nearest dollar.)

a. $35,838

b. $38,000

c. $64,000

d. $66,162

To determine

Introduction:

The average inventory costing system involves assigning the cost of goods available for sale on the basis of weighted average cost per unit.

To choose:

The option that states the cost of ending inventory using average inventory costing system.

Explanation
Date Description Cost of Goods Sold Inventory Balance Total Value
April 1 Beginning Inventory 1,200×$25 $30,000
April 9 Purchase 1 1,500×$28 $42,000
April 12 Sale 1 2,400×$26.6667 = $64,000 300×$26.6667 $8,000
April 22 Purchase 2 1,000×$30 $30,000
April 30 Ending Inventory $38,000

Cost of Goods Sold on April 12:

Total Cost of Inventory (until April 12) = Cost of Beginning Inventory

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