Pasquale has the following inventory information. $\begin{array}{rllr}
\text { July } 1 & \text { Beginning Inventory } & 20 \text { units at } \$ 19 & \$ 380 \
7 & \text { Purchases } & 70 \text { units at } \$ 20 & 1,400 \
22 & \text { Purchases } & 10 \text { units at } \$ 24 & 240\
& & &\$2,020
\end{array}$ A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the average-cost method the value of ending inventory is

Question

Pasquale has the following inventory information. $\begin{array}{rllr}
\text { July } 1 & \text { Beginning Inventory } & 20 \text { units at } \$ 19 & \$ 380 \
7 & \text { Purchases } & 70 \text { units at } \$ 20 & 1,400 \
22 & \text { Purchases } & 10 \text { units at } \$ 24 &  240\
& & &\$2,020
\end{array}$ A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the average-cost method the value of ending inventory is

Quizplus · Accepted Answer

To calculate the ending inventory using the average-cost method, we need to determine the average cost per unit first.

The total cost of goods available for sale is $1,980 ($1,800 beginning inventory + $180 purchases).

The total number of units available for sale is 50 (20 beginning inventory + 30 purchases).

Therefore, the average cost per unit is $39.60 ($1,980 ÷ 50).

To calculate the value of ending inventory, we multiply the number of units on hand (30) by the average cost per unit ($39.60):

$39.60 × 30 = $1,188

Therefore, the value of ending inventory is $606 ($1,188 - $582 cost of goods sold).

Pasquale Has the Following Inventory Information A Physical Count of Merchandise Inventory on July 31 Reveals