Use the following information for questions:
A company had the following inventory activity during January: $\begin{array}{lrrr}&\text { Units}&\text { Unit Cost }&\text {Total Cost }\\hline
\text { Beginning inventory } & 800 & \$ 10.00 & \$ 8,000 \
\text { Purchase: January } 5 & 1,400 & 11.00 & 15,400 \
\text { Sale: January } 8 & (1,500) & & \
\text { Purchase: January 13 } & 900 & 10.50 & 9,450 \
\text { Sales: January } 24 & (900) & &
\end{array}$
-If the company is using a perpetual system and the moving average costing assumption, what is the ending inventory closest to?
A)$8,470
B)$7,777
C)$7,560
D)$7,391

Question

Quizplus · Accepted Answer

Under the moving average costing method in a perpetual system, the cost of inventory is recalculated after each purchase. The calculation for the ending inventory after the given transactions is as follows:1. Beginning inventory: 800 units at $10.00 each = $8,000.2. Purchase on January 5: 1,400 units at $11.00 each = $15,400. New average cost = ($8,000 + $15,400) / (800 + 1,400) = $23,400 / 2,200 = $10.6364 per unit.3. Sale on January 8: 1,500 units sold, leaving 700 units at the average cost of $10.6364.4. Purchase on January 13: 900 units at $10.50 each = $9,450. New average cost = ($7,445.48 (700 units * $10.6364) + $9,450) / (700 + 900) = $16,895.48 / 1,600 = $10.5597 per unit.5. Sale on January 24: 900 units sold, leaving 700 units at the average cost of $10.5597.Ending inventory = 700 units * $10.5597 = $7,391.79, which rounds to $7,391.

Use the Following Information for Questions: a Company Had the Following

Use the Following Information for Questions:
a Company Had the Following