Assumming that a perpetual inventory system is used, what is ending inventory (rounded) under the average-cost method?

Sept. 1 Beginning inventory 10 units @$120
5 Purchase 60 units @$112
14 Sale 40 units
21 Purchase 30 units @$116
30 Sale 28 units


Answers given
a) $3,666
b) $3,712
c) $3,208
d) $7,734

Quote:

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Originally Posted by sweetkendra

Assumming that a perpetual inventory system is used, what is ending inventory (rounded) under the average-cost method?

Sept. 1 Beginning inventory 10 units @$120
5 Purchase 60 units @$112
14 Sale 40 units
21 Purchase 30 units @$116
30 Sale 28 units


answers given
a) $3,666
b) $3,712
c) $3,208
d) $7,734

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this is easy OK take your first units 10x120= 1,200 then 60x112=6720then add 1,200+6,720 and divide by the units to know the actual average value. Now sell 40 units with that average valuenow your balnce after the sale divide by 30 units which is the units you have left. Now purchase 30 units for 116then add 30x116 plus your balance divided by 60 units and that's your new average then sale 28 units at that amount and do your ending balancewhich is 32 units x the last average amount which is letter A 3,666

Quote:

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Originally Posted by sweetkendra

Assumming that a perpetual inventory system is used, what is ending inventory (rounded) under the average-cost method?

Sept. 1 Beginning inventory 10 units @$120
5 Purchase 60 units @$112
14 Sale 40 units
21 Purchase 30 units @$116
30 Sale 28 units


answers given
a) $3,666
b) $3,712
c) $3,208
d) $7,734

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Date... Goods Purchased... Cost of goods sold... inventory Bal.
9/1... begining inventory... 10@120=$1,200
9/5... 60@112= $6,720... 10@120=$1,200
... 60@112=$6,720
... avg. 70@$113
9/14... 40@113=$4,526... 30@113=$3,394
9/21... 30@116= $3,480... 30@113=$3,394
... 30@116=$3,480
... avg.60@$115
9/30... 28@115=$3,208... 32@115=$3,666

OK as you can see the answer to your Qs is "a"

Well understood