13SE Question:聽The periodic inventor... [FREE SOLUTION]

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Chapter 6: 13SE (page 360)

Question:The periodic inventory records of Flexon Prosthetics indicate the following for the month of July:
Jul. 1 Beginning merchandise inventory 6 units @ $ 60 each
8 Purchase 5 units @ $ 67 each
15 Purchase 10 units @ $ 70 each
26 Purchase 5 units @ $ 85 each
At July 31, Flexon counts four units of merchandise inventory on hand.
Compute ending merchandise inventory and cost of goods sold for Flexon using theweighted-average inventory costing method.

Short Answer

Expert verified

Ending Inventory:$280

Cost of goods sold:$1,540

Step by step solution

Step-by-Step-SolutionStep1: Computation on ending inventory under periodic inventory weighted average

In weighted average under periodic inventory, the cost of issued inventory is valued at the average prices. So the ending inventory would also be valued at average prices.

So in the given case, the cost of ending inventory would be as follow 鈥�

$A v e r a g e C o s t = \frac{O p e n i n g i n v e n t o r y + T o t a l P u r c h a s e}{T o t a l I n v e n t o r y} = \frac{6 脳 $ 60 + (5 脳 $ 67 + 10 脳 $ 70 + 5 脳 $ 85)}{6 + 5 + 10 + 5} = \frac{$ 1, 820}{26} = $ 70$

$E n d i n g i n e v n t o r y v a l u e = E n d i n g i n v e n t o r y (u n i t s) 脳 A v e r a g e C o s t = 4 脳 $ 70 = $ 280$

Computation of cost of goods sold

$C o s t o f g o o d s s o l d = O p e n i n g i n v e n t o r y + T o t a l P u r c h a s e - E n d i n g i n v e n t o r y = 6 脳 $ 60 + (5 脳 $ 67 + 10 脳 $ 70 + 5 脳 $ 85) - $ 280 = $ 360 + $ 1, 460 - $ 280 = $ 1, 540$

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	2019	2018	2017
Net Sales Revenue	\( 212,000	\) 161,000	\( 170,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\)22,000	\(28,000	\)41,000
Net cost of purchase	131,000	100,000	86,000
Cost of goods available for sale	153,000	128,000	127,000
Less: Ending Merchandise Inventory	34,000	22,000	28,000
Cost of goods sold	119,000	106,000	99,000
Gross Profit	93,000	55,000	71,000
Operating Expenses	63,000	28,000	39,000
Net Income	\( 30,000	\) 27,000	$ 32,000

	2019	2018	2017
Net Sales Revenue	\( 220,000	\) 162,000	\( 176,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\)22,000	\(29,000	\)46,000
Net cost of purchase	132,000	90,000	76,000
Cost of goods available for sale	154,000	119,000	122,000
Less: Ending Merchandise Inventory	32,000	22,000	29,000
Cost of goods sold	122,000	97,000	93,000
Gross Profit	98,000	65,000	83,000
Operating Expenses	72,000	38,000	48,000
Net Income	\( 26,000	\) 27,000	$ 35,000

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Short Answer

Step by step solution

Step-by-Step-SolutionStep1: Computation on ending inventory under periodic inventory weighted average

Computation of cost of goods sold

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