BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Weighted average cost method with perpetual inventory

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 7-1B.

Instructions

  1. 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method.
  2. 2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.
  3. 3. Determine the ending inventory cost on June 30.

(1)

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 record: inventory, purchase and cost of merchandise sold data in perpetual inventory record.

Explanation

Figure (1)

Working notes:

Calculate the weighted average unit cost as follows: (Apr 08)

Weighted average method
Quantity Unit cost Total cost of inventory in hand  
25 units $1,200 $30,000  
75 units $1,240 $93,000  
100 units   $123,000  

Table (1)

Weighted average unit cost = Total cost of inventory in handTotal quantity=$123,000100=$1,230 (1)

Calculate the weighted average unit cost as follows: (May 08)

Weighted average method
Quantity Unit cost Total cost of inventory in hand  
30 units $1,230 $36,900  
60 units $1,260 $75,600  
90 units   $112,500  

Table (2)

Weighted average unit cost = Total cost of inventory in handTotal quantity=$112,50090

(2)

To determine

To calculate: the sales and cost of merchandise sold accounts and gross profit.

(3)

To determine

To calculate: Ending inventory cost for the period.

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

What are the advantages of a partnership?

Foundations of Business (MindTap Course List)

What four financial statements are contained in most annual reports?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

List the steps in the closing procedure in the correct order.

College Accounting (Book Only): A Career Approach

EXPECTATIONS THEORY AND INFLATION Suppose 2-year Treasury bonds yield 4.5%, while 1-year bonds yield 3%. r is 1...

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