Question

During the year, Wright Company sells 500 remote-control airplanes for $120 each. The company has the following inventory purchase transactions for the year. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 40 $ 68 $ 2,720 May. 5 Purchase 270 71 19,170 Nov. 3 Purchase 220 76 16,720 530 $ 38,610 Calculate ending inventory and cost of goods sold for the year, assuming the company uses weighted-average cost.

Answer 1

Answer:

Ending inventory = $2,185.47

Cost of goods sold = $36,424.53

Explanation:

500 units sold at $120

Date         Transaction                  Units         Unit Cost          Total Cost

Jan. 1        Beg. inventory               40               $68                 $2,720

May. 5      Purchase                      270               $71                  $19,170

Nov. 3      Purchase                      220               $76                 $16,720

Total                                              530               $72.849         $38,610

Ending inventory = (530 - 500) x $72.849 = $2,185.47

Cost of goods sold = 500 x $72.849 = $36,424.53

When you use the weighted average method, you add the total amount of purchases + beg. inventory, and then divide by the total amount of units.