Question

Hadley Bear, Inc. uses a periodic inventory system. At the end of the January 31, 2017, the accounting records for the most popular item in inventory showed the following: Transactions Units Unit Cost Beginning Inventory, Jan 1 350 $1 Purchases January 10 450 $4 Purchase, January 30 200 $7 Hadley Bear sells the units for $20 each. At the end of the period, Hadley Bear has 180 units remaining in inventory. What is the cost of goods sold if Hadley Bear uses the average cost method?

Answer 1

COGS= $3,280

Step-by-step explanation:

Giving the following information:

Beginning Inventory= 350 units for $1 each

Purchases January 10= 450 $4

Purchase, January 30= 200 $7

At the end of the period, Hadley Bear has 180 units remaining in inventory.

First, we need to calculate the number of units sold:

Units sold= total units - ending inventory in units

Units sold= 1,000 - 180

Units sold= 820 units

Now, the average cost:

Average cost= (1 + 4 + 7)/3= $4

COGS= 4*820= $3,280