On June 1, Corona Company had 40 units of inventory at a cost of $6 each.June purchases and sales were as follows: $\begin{array}{llll}
&\text { Purchases }&&\text { Sales }\
\text { June } 5 & 10 \text { units } @ \$ 8 & \text { June } 4 & 20 \text { unit } \
12 & 20 \text { units } @ \$ 10 & 20 & 12 \text { unit }\
25& 10 \text { units } \$ 16
\end{array}$
The cost of goods sold during June was $272.Corona must use:
A)FIFO
B)LIFO perpetual
C)weighted average
D)LIFO periodic

Question

On June 1, Corona Company had 40 units of inventory at a cost of $6 each.June purchases and sales were as follows: $\begin{array}{llll}
&\text { Purchases }&&\text { Sales }\ 
\text { June } 5 & 10 \text { units } @ \$ 8 & \text { June } 4 & 20 \text { unit } \
12 & 20 \text { units } @ \$ 10 & 20 & 12 \text { unit }\
25& 10 \text { units } \$ 16
\end{array}$
 The cost of goods sold during June was $272.Corona must use:
A)FIFO
B)LIFO perpetual
C)weighted average
D)LIFO periodic

Quizplus · Accepted Answer

In weighted average method, the cost of goods sold is calculated by taking the weighted average cost of all units available for sale during the period. This method is suitable when there is a large number of similar items in inventory and it is difficult to track individual units. Since Corona had only 40 units of inventory and the cost of each unit was the same, it is feasible to calculate the weighted average cost of goods sold. Thus, using the weighted average method is the best choice for Corona.

On June 1, Corona Company Had 40 Units of Inventory