Question

Assume that three identical units of merchandise were purchased during October, as follows:

Units Cost
Oct. 5 Purchase 1 $5
12 Purchase 1 13
28 Purchase 1 15
Total 3 $33
Assume one unit is sold on October 31 for $28. Determine cost of merchandise sold, gross profit, and ending inventory under the average cost method.

Answer 1

Cost of Merchandise sold: $11

Gross Profit: $17

Ending inventory: $22

Step-by-step explanation:

STATEMENT SHOWING INVENTORY RECORD UNDER WEIGHTED AVERAGE METHOD

RECIEPTS COST OF GOODS SOLD BALANCE

DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $

balance

05-Oct 1 5 5

12-Oct 1 13 13

28-Oct 1 15 15

TOTAL 3 11 33 1 11 11 2 11 22

Gross Profit:

Sales revenue 28

Less: Cost of good sold 11

Gross Profit: 17