Log out Go to App
Go to App

Learning Materials

Features

Discover

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

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Discuss some measures that should be taken to maintain control over merchandise inventory.

Question:Boston Cycles started October with 12 bicycles that cost \(42 each. On October 16, Boston bought 40 bicycles at \)68 each. On October 31, Boston sold 34 bicycles for$100 each.

Preparing a perpetual inventory record and journal entries—FIFO

Requirements

2. Journalize the October 16 purchase of merchandise inventory on the account and theOctober 31 sale of merchandise inventory on the account.

When using the periodic inventory system, which inventory costing method(s) always produces the same result as when using the perpetual inventory system?

Question:Refer to Short Exercises S6-4 through S6-6. After completing those exercises, answer the following questions:

Requirements

2. Which inventory costing method produced the highest cost of goods sold?

Steel Mill began August with 50 units of iron inventory that cost \(35 each. During August, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Aug. 3 Sale 45 \) 85

8 Purchase 90 $ 54

21 Sale 85 88

30 Purchase 15 58

Requirements

5. Compute gross profit for August using FIFO, LIFO, and weighted-average inventory costing methods.
See all solutions

Recommended explanations on Business Studies Textbooks

Human Resources

Read Explanation

Business Development

Read Explanation

Corporate Finance

Read Explanation

Change Management

Read Explanation

Business Case Studies

Read Explanation

Managers

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free