Question 2-3

If Entity B uses the weighted average method for the inventory measurement:

        (1) What is the amount of cost of goods sold for January 20x1?

        (2) What is the amount of ending inventory at January 31, 20x1?

Date

Units

Purchased

Units Sold

Inventory

Cost

per Unit

Amount

1

Beginning inventory

1,000

$50

$50,000

11

Purchased

1,200

$52

$62,400

Total

2,200

Average

$51.0909

$112,400

16

Sold

1,700

$51.0909

$86,855

Remaining

500

$51.0909

$25,545

27

Purchased

1,400

$56

$78,400

Total

1,900

$54.7079

$103,945

Total

3,600

1,700

Cost of goods sold

$86,855

Ending inventory

1,900

$54.7079

$103,945

Calculation of Weighted Average Cost

For the units sold on January 16

        Average cost per unit = Total amount / Total units

                = $112,400 / 2,200 units = $51.0909 per unit

For the units sold on January 27

        Average cost per unit = Total amount / Total units

                = $103,945 / 1,900 units = $54.7079 per unit

        

        (1) Cost of goods sold = $86,855

        (2) Ending inventory at January 31, 20x1 = 1,900 units x $54.7079 = $103,945