Refer to the data for E5-16A. However, instead of the FIFO method, assume Austin’s Jewelers uses the average cost method.

Requirements 1. Prepare a perpetual inventory record for the watches on the average cost basis to determine the cost of ending inventory and cost of goods sold for the month. Round average cost per unit to the nearest cent and all other amounts to the nearest dollar.

2. Journalize Austin’s Jewelers’ inventory transactions using the perpetual average cost method. Assume that all purchases and sales are on account.

5-16

Austin’s Jewelers carries a line of waterproof watches. Austin’s Jewelers uses the FIFO method and a perpetual inventory system. The sales price of each watch is $175. Company records indicate the following activity for waterproof watches for the month of March:

Transcribed Image Text:

Date Item Quantity Unit Cost Mar 1 Balance 3 $ 96 7 Purchase 10 $ 98 11 Sale 12 19 Purchase 15 $104 28 Sale 10