Alexandra's Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Alexandra's Boutique uses a periodic inventory system. Date Transactions Units Unit Cost Total CostOctober 1 Beginning inventory 6 $750 $4,500October 4 Sale 4 October 10 Purchase 5 760 3,800October 13 Sale 3 October 20 Purchase 4 770 3,080October 28 Sale 7 October 30 Purchase 6 780 4,680 $16,060Problem 6-1A (Algo) Part 44. Using weighted-average cost, calculate ending inventory and cost of goods sold at October 31. (Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)
Question
Alexandra's Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Alexandra's Boutique uses a periodic inventory system. Date Transactions Units Unit Cost Total CostOctober 1 Beginning inventory 6 4,500October 4 Sale 4 October 10 Purchase 5 760 3,800October 13 Sale 3 October 20 Purchase 4 770 3,080October 28 Sale 7 October 30 Purchase 6 780 4,680 $16,060Problem 6-1A (Algo) Part 44. Using weighted-average cost, calculate ending inventory and cost of goods sold at October 31. (Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)
Solution
To calculate the ending inventory and cost of goods sold (COGS) using the weighted-average cost method, follow these steps:
Step 1: Calculate the total units available for sale. This is the sum of all units in the beginning inventory and all purchases made during the month.
Beginning inventory: 6 units Purchases: 5 units (October 10) + 4 units (October 20) + 6 units (October 30) = 15 units Total units available for sale: 6 units (beginning inventory) + 15 units (purchases) = 21 units
Step 2: Calculate the total cost of units available for sale. This is the sum of the total cost of the beginning inventory and all purchases made during the month.
Total cost of beginning inventory: 3,800 (October 10) + 4,680 (October 30) = 4,500 (beginning inventory) + 16,060
Step 3: Calculate the weighted-average cost per unit. This is the total cost of units available for sale divided by the total units available for sale.
Weighted-average cost per unit: 764.76 (rounded to 4 decimal places)
Step 4: Calculate the COGS. This is the weighted-average cost per unit multiplied by the number of units sold.
Units sold: 4 units (October 4) + 3 units (October 13) + 7 units (October 28) = 14 units COGS: 10,706.64 (rounded to 2 decimal places)
Step 5: Calculate the ending inventory. This is the weighted-average cost per unit multiplied by the number of units remaining in the ending inventory.
Units remaining in ending inventory: 21 units (total units available for sale) - 14 units (units sold) = 7 units Ending inventory: 5,353.32 (rounded to 2 decimal places)
So, using the weighted-average cost method, the ending inventory at October 31 is 10,706.64.
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