Requlred Information Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15. Monson sells 30 units for $35 each. Purchases on December 7 Purchases on December 14 Purchases on December 21 20 units e s14.e0 cost 36 units e $21.e0 cost 30 units e $25.e0 cost Requlred: Monson sells 30 units for $35 each on December 15. Of the units sold, 16 are from the December 7 purchase and 14 are from the December 14 purchase. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.
Requlred Information Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15. Monson sells 30 units for $35 each. Purchases on December 7 Purchases on December 14 Purchases on December 21 20 units e s14.e0 cost 36 units e $21.e0 cost 30 units e $25.e0 cost Requlred: Monson sells 30 units for $35 each on December 15. Of the units sold, 16 are from the December 7 purchase and 14 are from the December 14 purchase. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Educational Resource on Inventory Management**
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**Required Information**
Trey Monson begins a merchandising business on December 1, making the following three inventory purchases. Additionally, on December 15, Monson sells 30 units at $35 each.
**Inventory Purchases:**
- December 7: 20 units @ $14.00 each
- December 14: 36 units @ $21.00 each
- December 21: 30 units @ $25.00 each
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**Task:**
Monson sells 30 units for $35 each on December 15. Of these units, 16 are from the December 7 purchase, and 14 are from the December 14 purchase. Monson utilizes a perpetual inventory system. The objective is to determine the costs assigned to the ending inventory on December 31 using specific identification.
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**Explanation of Inventory Analysis Table:**
The table provides a detailed record of goods purchased, cost of goods sold, and inventory balance on specific dates:
1. **Goods Purchased:**
- Displays the number of units purchased and the cost per unit.
2. **Cost of Goods Sold:**
- Shows the number of units sold, the cost per unit for these units, and the total cost of goods sold.
3. **Inventory Balance:**
- Lists the remaining number of units, their cost per unit, and the total inventory balance after sales.
**Table Details:**
- **December 7:**
- Purchase: 20 units @ $14.00
- Inventory Balance: 20 units @ $14.00 each
- **December 14:**
- Purchase: 36 units @ $21.00
- Inventory Balance: 20 units @ $14.00, 36 units @ $21.00
- **December 15 (Sale):**
- Sold: 16 units @ $14.00, 14 units @ $21.00
- Cost of Goods Sold: Calculated and recorded
- **December 21:**
- Purchase: 30 units @ $25.00
- Final Inventory Balance: Reflects remaining and newly added stock
- **Totals Row:**
- Summarizes the total cost of goods sold and ending inventory balance.
This systematic approach aids in understanding inventory management using the perpetual inventory system and specific identification method.
Transcribed Image Text:**Inventory Management using Weighted Average Method**
**Scenario:**
Trey Monson starts a merchandising business on December 1. He makes three inventory purchases and a sale as follows:
1. December 7: 20 units at $14.00 each
2. December 14: 36 units at $21.00 each
3. December 21: 30 units at $25.00 each
4. December 15: Sells 30 units at $35.00 each
**Objective:**
Calculate the cost assigned to ending inventory using the perpetual weighted average method. Costs must be rounded to two decimal places.
**Weighted Average Inventory Calculation:**
The table shows the perpetual weighted average method. It tracks the number of units purchased, sold, and remaining in inventory while calculating costs.
- **Goods Purchased:**
- **Date, # of Units, Cost per Unit, Inventory Value:**
- December 7: Initial stock with total inventory value (calculated by multiplying units and cost per unit).
- December 14: Additional purchase data included.
- December 21: Latest purchase data.
- **Cost of Goods Sold:**
- **Date, # of Units Sold, Cost per Unit, Total Cost:**
- December 15: Details the sale of 30 units. Cost of Goods Sold (COGS) is calculated using the weighted average cost per unit at that time.
- **Inventory Balance:**
- **Date, # of Units, Cost per Unit, Inventory Balance:**
- Calculations adjust after each purchase or sale.
- Inventory balance reflects changes due to the transactions.
**Explanation of Calculations:**
- **Average Cost:**
- Calculated after each transaction by dividing total inventory value by total units available.
- Adjusted as new inventory is purchased or sold.
**Summary:**
The totals row at the bottom provides an overview of the total costs involved during the entire period. The exercise demonstrates how the weighted average cost method helps manage inventory by spreading total cost over all units available, aiding in accurate financial evaluation and decision-making.
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