Weighted Average Cost Methodwith Perpetual Inventory

The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period are as follows:

Jan. 1		Inventory	7,500		$75.00		$562,500
10		Purchase	22,500		85.00		1,912,500
28		Sale	11,250		150.00		1,687,500
30		Sale	3,750		150.00		562,500
Feb. 5		Sale	1,500		150.00		225,000
10		Purchase	54,000		87.50		4,725,000
16		Sale	27,000		160.00		4,320,000
28		Sale	25,500		160.00		4,080,000
Mar. 5		Purchase	45,000		89.50		4,027,500
14		Sale	30,000		160.00		4,800,000
25		Purchase	7,500		90.00		675,000
30		Sale	26,250		160.00		4,200,000

Required:

1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated inExhibit 5, using the weighted average cost method. Round unit cost to two decimal places, if necessary. Round all total cost amounts to the nearest dollar.

Jan. 1							$	$
Jan. 10	$	$
Jan. 28				$	$
Jan. 30
Feb. 5
Feb. 10
Feb. 16
Feb. 28
Mar. 5
Mar. 14
Mar. 25
Mar. 30
Mar. 31	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 as of March 31. $

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 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 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).

3/17/17, 9(35 PM 1. 2. 3. Weighted Average Cost Method with Perpetual Inventory The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period are as follows: Number Date Transaction of Units Per Unit Total Jan. 1 Inventory 7,500 $75.00 $562,500 10 Purchase 22,500 85.00 1,912,500 28 Sale 11,250 150.00 1,687,500 30 Sale 3,750 150.00 562,500 Feb. 5 Sale 1,500 150.00 225,000 10 Purchase 54,000 87.50 4,725,000 16 Sale 27,000 160.00 4,320,000 28 Sale 25,500 160.00 4,080,000 Purchase 45,000 89.50 4,027,500 14 Sale 30,000 160.00 4,800,000 25 Purchase 7,500 90.00 675,000 30 Sale 26,250 160.00 4,200,000 Mar. 5 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. Round unit cost to two decimal places, if necessary. Round all total cost amounts to the nearest dollar. Midnight Supplies Schedule of Cost of Goods Sold Weighted Average Cost Method For the Three Months Ended March 31 Purchases Date Quantity Unit Cost Cost of Goods Sold Total Cost Quantity Unit Cost Total Cost Jan. 10 Jan. 28 Jan. 30 Feb. 5 Quantity 22,500 $ 85 $ 1,912,500 Unit Cost Total Cost 75 30,000 82.5 2,475,000 7,500 1 Jan. Inventory $ $ 562,500 11,250 $ 82.5 $ 928,125 18,750 82.5 1,546,875 3,750 82.5 309,375 15,000 82.5 1,237,500 1,500 82.5 123,750 13,500 82.5 1,113,750 Feb. http://cxp.cengage.com/activityservice/run/html5/handler.jsp?id=e10...engagenow.com&xdm_c=activityService_activity_1489804832241&xdm_p=1 Page 1 of 3 3/17/17, 9(35 PM 10 54,000 87.5 4,725,000 Feb. 16 Feb. 28 Mar. 5 45,000 89.5 Mar. 25 7,500 90 5,838,750 86.5 2,335,500 40,500 86.5 3,503,250 25,500 86.5 2,205,750 15,000 86.5 1,297,500 60,000 88.75 5,325,000 2,662,500 30,000 88.75 2,662,500 3,337,500 30,000 14 86.5 27,000 4,027,500 Mar. 67,500 88.75 675,000 37,500 89 Mar. 3,337,500 30 Mar. 31 $ Balances $ 3,337,500 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 as of March 31. $ Feedback Check My Work 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 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 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). Learning Objective 2, Learning Objective 3. 4. 5. http://cxp.cengage.com/activityservice/run/html5/handler.jsp?id=e10...engagenow.com&xdm_c=activityService_activity_1489804832241&xdm_p=1 Page 2 of 3 3/17/17, 9(35 PM 1 more Check My Work uses remaining. http://cxp.cengage.com/activityservice/run/html5/handler.jsp?id=e10...engagenow.com&xdm_c=activityService_activity_1489804832241&xdm_p=1 Page 3 of 3