Weighted Average Cost Flow Method Under Perpetual Inventory

Weighted Average Cost Flow Method Under Perpetual Inventory System

The following units of a particular item were available for sale during the calendar year:
Jan. 1    Inventory    30,000 units at $30.00
Mar. 18    Sale    24,000 units
May 2    Purchase    54,000 units at $31.00
Aug. 9    Sale    45,000 units
Oct. 20    Purchase    21,000 units at $32.10

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

Solution

Ans. Statement of weighted average cost flow method under perpetual inventory system: Date Purchase Sale Balance Unit Unit Cost Total Unit Unit Cost Total Unit Unit Cost Total Jan.1     30,000 30        900,000     30,000 30         900,000 Mar.18       24,000 30       720,000        6,000 30         180,000 May.2     54,000 31     1,674,000     60,000 30.9      1,854,000 Aug.9       45,000 30.9 1,390,500     15,000 30.9         463,500 Oct.20     21,000 32.1        674,100     36,000 31.6      1,137,600 Therefore, i) Cost of mechandise sold for each sale: Amt. ($) March.18       720,000 August.9    1,390,500 ii) Inventory balance after each sale: Amt. ($) March.18       180,000 August.9       463,500