Q34PGB_3 - Horngren'S Financial And Managerial Accounting

Question

Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Jan. 3 Sale 45 \) 83

8 Purchase 75 $ 52

21 Sale 70 85

30 Purchase 10 55

Requirements

3. Prepare a perpetual inventory record for the merchandise inventory using theweighted-average inventory costing method.

Step-by-Step Solution

Answer

The ending inventory at average cost comes out to be $1,300

Step1: Weighted Average costing method

The weighted average costing method is the mid-way between the FIFO method and the LIFO method. In the weighted average method, the average cost is computed after every purchase, and the goods are sold on the immediate average cost. The average cost is the mean value of FIFO cost and LIFO cost.

Step 2: Perpetual inventory table under the weighted average method