Question

Perpetual Inventory Using Weighted Average

Beginning inventory, purchases, and sales for H76 are as follows:

July 1 Inventory 300 units at $120
12 Sale 210 units
23 Purchase 360 units at $135
26 Sale 330 units
a. Assuming a perpetual inventory system and using the weighted average method, determine the weighted average unit cost after the July 23 purchase.
$fill in the blank 1
per unit

b. Assuming a perpetual inventory system and using the weighted average method, determine the cost of the merchandise sold on July 26.
$fill in the blank 2
c. Assuming a perpetual inventory system and using the weighted average method, determine the inventory on July 31.
$fill in the blank 3

Answer 1

The weighted average unit cost after the July 23 purchase is $128.18 per unit. The cost of merchandise sold on July 26 is $42,299.40. The inventory value on July 31 is also $42,299.40.

Step-by-step explanation:

Calculation of Weighted Average Cost

When using the perpetual inventory system with weighted average method, the calculation of the weighted average unit cost after the July 23 purchase can be determined as follows:

1. Calculate total cost of current inventory (before the purchase on July 23):
   
   300 units × $120 = $36,000
2. Add the cost of new purchase on July 23:
   
   360 units × $135 = $48,600
3. Calculate the total units and total cost:
   300 units (beginning inventory) + 360 units (new purchase) = 660 units
   $36,000 (beginning inventory cost) + $48,600 (new purchase cost) = $84,600 (total cost)
4. Divide the total cost by total units to get the weighted average cost per unit:
   $84,600 / 660 units = $128.18 per unit

To determine the cost of merchandise sold on July 26:

1. Use the weighted average cost per unit calculated after the July 23 purchase.
   $128.18 per unit
2. Multiply this rate by the number of units sold on July 26th:
   330 units × $128.18 = $42,299.40

To determine the inventory on July 31:

1. Start with the total units after the purchase on July 23:
   660 units.
2. Subtract the units sold on July 26:
   660 units - 330 units = 330 units remaining.
3. Calculate the value of remaining inventory using the weighted average cost per unit:
   330 units × $128.18 = $42,299.40