Shown below is activity for one of the products of Denver Office Equipment: |
January 1 balance, 570 units @ $50 $28,500 |
Purchases: |
January 10: 570 units @ $60 |
January 20: 1,060 units @ $61 |
Sales: |
January 12: 1,000 units |
January 28: 770 units |
Required: | |
Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a periodic inventory system. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) |
Expert Answer
Step-1:Calculate Weighted Average Cost per unit | ||||||||||
Weighted Average Cost per unit | = | ((570*50)+(570*60)+(1060*61))/(570+570+1060) | ||||||||
= | $ 57.89 | |||||||||
Step-2:Calculate Units sold and ending Inventory | ||||||||||
Units Available for sale | (570+570+1060) | 2,200 | ||||||||
Less:Units sold | (1000+770) | 1,770 | ||||||||
Ending Inventory | 430 | |||||||||
Step-3:Calculation of Ending Inventory and cost of goods sold | ||||||||||
Cost of Ending Inventory | 430 | x | $ 57.89 | = | $ 24,893 | |||||
Cost of goods sold | 2,200 | x | $ 57.89 | = | $ 1,27,360 | |||||
Thus, | ||||||||||
January 31 endng inventory | $ 24,893 | |||||||||
Cost of goods sold for January | $ 1,27,360 | |||||||||