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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

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

Perpetual inventory using weighted average

Beginning inventory, purchases, and sales for Meta-B1 are as follows:

July 1 Inventory 100 units at $400
12 Sale 70 units
23 Purchase 120 units at $450
26 Sale 110 units

Assuming a perpetual inventory system and using the weighted average method, determine (a) the weighted average unit cost after the July 23 purchase, (b) the cost of the merchandise sold on July 26, and (c) the inventory on July 31.

(a)

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.

To determine: the weighted average unit cost after July 23 purchases.

Explanation

Calculate the weighted average unit cost as follows:

Weighted average method
Quantity Unit cost Total cost of inventory in hand
30 units $400 $12,000
120 units $450 $54,000
150 units   $66,000

(b)&(c)

To determine
cost of merchandise sold for each sale and inventory balance after each sale of Meta as on July 31.

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