6SE_1 - Horngren'S Financial And Managerial Accounting

Question

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— Weighted-average

Requirements

1. Prepare Boston Cycle’s perpetual inventory record assuming the company uses theweighted-average inventory costing method.

 

Step-by-Step Solution

Answer

The cost of goods sold under the weighted average method amounts to $2,108.

Step-by-Step-Solution Step1: Weighted Average costing method

The weighted average costing method evaluated the inventory based on the weighted average price of all the available inventory. Under this method, the cost of goods sold and ending inventory values falls at the midpoint between the FIFO and LIFO inventory value. 

Step 2: Perpetual inventory record based on the weighted average method

Date	Purchase / Opening inventory	Sale	Balance
	Unit	Cost	Amount	Unit	Cost	Amount	Unit	Cost	Amount
Oct 1	12	$42	$504				12	$42	$504
Oct 16	40	$68	$2,720				52	$62	$3,224
Oct 31				34	$62	$2,108	18	$62	$1,116