Aldor Corporation opened a new store on January 1, 2021. During 2021, the first year of operations, the following purchases and sales of inventory were made:

Instructions

a. Calculate the cost of goods available for sale and the number of units of ending inventory.

b. Assume Aldor uses weighted average periodic. Calculate the cost of ending inventory, cost of the goods sold, and gross profit.

c. Assume Aldor uses weighted average perpetual. Calculate the cost of ending inventory, cost of the goods sold, and gross profit.

d. Prepare journal entries to record the December 20 purchase and the December 29 sale using (1) weighted average periodic and (2) weighted average perpetual. Assume both the sale and purchase were for cash.

e. Compare the results of parts (b) and (c) above and comment.

If a company uses the weighted average cost formula, are there any benefits to using weighted average in a perpetual inventory system compared with using weighted average in a periodic inventory system? Explain.

Transcribed Image Text:

Purchases Sales Date Units Cost per unit Date Units Price per unit $1,000 1,200 July 4 $2,000 2,000 Jan. 5 10 15 June 11 10 Dec. 29 35 Oct. 18 15 1,300 Dec. 20 20 1,500