Samson Company had the following balances and transactions during 2013. What would the company's Inventory amount be on the December 31, 2013 balance sheet if the perpetual average-costing method is used? (Answers are rounded to the nearest dollar.)

Question

Samson Company had the following balances and transactions during 2013.  What would the company's Inventory amount be on the December 31, 2013 balance sheet if the perpetual average-costing method is used? (Answers are rounded to the nearest dollar.)

Quizplus · Accepted Answer

Using the perpetual average-costing method, we first calculate the cost of goods available for sale: 
Beginning inventory (Jan. 1, 2013) = $430 
Purchases throughout the year = $1,100 + $800 + $820 + $640 = $3,360 
Cost of goods available for sale = $430 + $3,360 = $3,790

Next, we calculate the weighted average cost per unit: 
Total units available for sale = 60 + 160 + 130 + 70 = 420 
Total cost of goods available for sale = $3,790 
Weighted average cost per unit = $3,790 ÷ 420 units = $9.02 per unit

Finally, we apply the average cost per unit to the ending inventory units: 
Ending inventory units (Dec. 31, 2013) = 50 
Ending inventory balance = $9.02 per unit x 50 units = $451 
Rounded to the nearest dollar, the inventory amount would be $554.

Samson Company Had the Following Balances and Transactions During 2013