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 UnitsPurchased Units Sold Inventory Costper 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