A method of inventory costing in which the cost of the units sold and in ending inventory is a weighted average of the purchase costs. 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 7,000 $75.00 $525,000 10 Purchase 21,000 85.00 1,785,000 28 Sale 10,500 150.00 1,575,000 30 Sale 3,500 150.00 525,000 Feb. 5 Sale 1,400 150.00 210,000 10 Purchase 50,400 87.50 4,410,000 16 Sale 25,200 160.00 4,032,000 28 Sale 23,800 160.00 3,808,000 Mar. 5 Purchase 42,000 89.50 3,759,000 14 Sale 28,000 160.00 4,480,000 25 Purchase 7,000 90.00 630,000 30 Sale 24,500 160.00 3,920,000 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. 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 Cost of Goods Sold Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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

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.

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.
$___________

A method of inventory costing in which the cost of the units sold and in ending inventory is a weighted average of the purchase costs.
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
7,000
$75.00
$525,000
10
Purchase
21,000
85.00
1,785,000
28
Sale
10,500
150.00
1,575,000
30
Sale
3,500
150.00
525,000
Feb. 5
Sale
1,400
150.00
210,000
10
Purchase
50,400
87.50
4,410,000
16
Sale
25,200
160.00
4,032,000
28
Sale
23,800
160.00
3,808,000
Mar. 5
Purchase
42,000
89.50
3,759,000
14
Sale
28,000
160.00
4,480,000
25
Purchase
7,000
90.00
630,000
30
Sale
24,500
160.00
3,920,000
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. 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
Cost of Goods Sold
Inventory
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
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.
$

Expert Solution

Step 1:

The inventory valuation can be done using different systems like perpetual inventory system or periodic inventory system. Under the perpetual inventory system, the cost of goods sold is recorded at the time of sale transaction while under the periodic inventory system, the change in inventory is recorded at the end of the period.

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