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Chapter 06 Homework Hide or show questions Weighted Average Cost Method with Perpetual Inventory The beginning inventory for Dunne Co. and data on purchases and

Chapter 06 Homework

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  1. Weighted Average Cost Method with Perpetual Inventory

    The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are as follows:

    Date Transaction Number of Units Per Unit Total
    Apr. 3 Inventory 25 $1,200 $30,000
    8 Purchase 75 1,240 93,000
    11 Sale 40 2,000 80,000
    30 Sale 30 2,000 60,000
    May 8 Purchase 60 1,260 75,600
    10 Sale 50 2,000 100,000
    19 Sale 20 2,000 40,000
    28 Purchase 80 1,260 100,800
    June 5 Sale 40 2,250 90,000
    16 Sale 25 2,250 56,250
    21 Purchase 35 1,264 44,240
    28 Sale 44 2,250 99,000

    Required:

    1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method.

    Dunne Co. Schedule of Cost of Goods Sold Weighted Average Cost Method For the Three Months Ended June 30
    Purchases Cost of Goods Sold Inventory
    Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
    Apr. 3 $ $
    Apr. 8 $ $
    Apr. 11 $ $
    Apr. 30
    May 8
    May 10
    May 19
    May 28
    June 5
    June 16
    June 21
    June 28
    June 30 Balances $ $

    2. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period.

    Total sales $
    Total cost of goods sold $
    Gross profit $

    3. Determine the ending inventory cost on June 30. $

    Feedback

    1. When the perpetual inventory system is used, revenue is recorded each time a sale is made along with an entry to record the cost of the goods sold. Under the weighted average method the average unit cost must be determined after each purchase by dividing the total of cost of goods on hand by the total units on hand. The cost of merchandise goods sold is computed multiplying the average unit cost on the date of sales by the units sold. The inventory balance after a sale is computed by multiplying the average unit cost by the units on hand.

    2. Total sales are obtained by taking the number of units sold times their sale prices for all sales and adding these amounts together. The total cost of goods sold can be obtained by adding the weighted average costs in the perpetual inventory record. Sales minus cost of goods sold equals gross profit.

    3. The ending inventory cost can be taken from the perpetual inventory record in Part (1).

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