Refer to the data for E5-28B. However, instead of the FIFO method, assume that Underwater Way 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 Underwater Way’s inventory transactions using the perpetual average cost method. Assume that all purchases and sales are on account.

5-28

Underwater Way carries a line of waterproof watches. Underwater Way uses the FIFO method and a perpetual inventory system. The sales price of each watch is $188. Company records indicate the following activity for waterproof watches for the month of August:

Transcribed Image Text:

Date Item Quantity Unit Cost Aug 11 Balance 4 $106 7 Purchase 13 $110 11 Sale 16 19 Purchase 18 $112 28 Sale 11