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Chapter 6: Q2TI-d (page 338)

Serenity Books has the following transactions in August related to merchandise inventory.

Aug. 1 Beginning merchandise inventory, 10 books @ \(15 each

3 Sold 3 books @ \)20 each

12 Purchased 8 books @ \(18 each

15 Sold 9 books @ \)20 each

20 Purchased 4 books @ \(20 each

28 Sold 5 books @ \)25 each

d. Determine the cost of goods sold and ending merchandise inventory by preparing a perpetual inventory record using the weighted-average inventory costing method. Round weighted-average unit cost to the nearest cent and total cost to the nearest dollar.

Short Answer

Expert verified

Cost of goods sold: $313

Ending Inventory: $85

Step by step solution

01

Weighted average inventory costing under perpetual record

Weighted Average costing is a cost flow assumption of applying the average cost for the issued inventory. Perpetual record is the method of updating inventory accounts continuously for each event. So average inventory under perpetual record is the method of applying average cost assumption for continuous updating of inventory records.

02

Computation of COGS and Ending Inventory under weighted average cost

Date
Purchase/openingSales
Balance

Units

Cost per unit

Amount

Units

Cost per unit

Amount

Units

Cost per unit

Amount











Aug1

10

$15

$150

10

$15

$150

3

3

$15

$75

7

$15

$105

12

8

$18

$144

15

$17

$249

15

9

$17

$153

6

$17

$102

20

4

$20

$80

10

$17

$170

28

5

$17

$85

5

$17

$85

Total

22

$374

17

$313

5

$85

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Most popular questions from this chapter

Question:Assume that Toys Galore store bought and sold a line of dolls during December as follows:

Dec. 1 Beginning merchandise inventory 13 units @ \( 9 each

8 Sale 8 units @ \) 22 each

14 Purchase 16 units @ \( 14 each

21 Sale 14 units @ \) 22 each

Requirements

5. Which method results in a higher gross profit?

Question:New York Pool Supplies鈥檚 merchandise inventory data for the year ended December 31, 2019, follow:

Net Sales Revenue\( 58,000

Cost of Goods Sold:

Beginning Merchandise Inventory\) 4,900

Net Cost of Purchases 32,500

Cost of Goods Available for Sale37,400

Less: Ending Merchandise Inventory 4,700

Cost of Goods Sold32,700

Gross Profit $ 25,300

Requirements

2. How would the inventory error affect New York Pool Supplies鈥檚 cost of goodssold and gross profit for the year ended December 31, 2020, if the error is not correctedin 2019?

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 theLIFO inventory costing method.

Which principle states that businesses should use the same accounting methods and procedures from period to period?

Clarmont 91影视, which uses the FIFO inventory costing method, has the following account balances at May 31, 2019, prior to releasing the financial statements for the year:

Merchandise Inventory, ending \( 13,500

Cost of Goods Sold 68,000

Net Sales Revenue 123,000

Clarmont has determined that the current replacement cost (current market value) of the May 31, 2019, ending merchandise inventory is \)12,400.

Requirements

2. What value would Clarmont report on the balance sheet at May 31, 2019, for merchandise inventory?
See all solutions

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