Question

The following information was available from the inventory records of Coronado Industries for January: Units Unit Cost Total Cost Balance at January 1 9200 $9.78 $89976 Purchases: January 6 6100 10.24 62464 January 26 7900 10.69 84451 Sales January 7 (7700 ) January 31 (11000 ) Balance at January 31 4500 Assuming that Coronado maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar

Answer 1

$46,485

Step-by-step explanation:

The perpetual inventory method ensures that the cost of sales and inventory value is calculated after each and every sale made.

The Average inventory method involves the calculation of a new unit cost after each purchase. This new unit cost is used to calculate the the cost of sales and inventory value.

Unit Cost = Total Cost ÷ Units available for sale

New Unit Cost calculations

January 6 = (9,200 x $9.78 + 6,100 x $10.24) ÷ 15,300 = $9.963

January 26 = (7,600 x $9.963 + 7,900 x $10.69) ÷ 15,500 = $10.33

Ending Inventory

Ending Inventory = Ending units x recent unit cost

= 4,500 units x $10.33

= $46,485

Conclusion

The Inventory at January 31, using the moving-average inventory method should be $46,485.