Koontz Company uses the perpetual inventory method and the weighted-average method. On January 1, Year 1, the company's first day of operations, Koontz purchased 1,150 units of inventory that cost $5.50 each. On January 10, Year 1, the company purchased an additional 1,400 units of inventory that cost $7.50 each. If the company sells 1,300 units of inventory, what is the amount of inventory that would appear on the balance sheet immediately following the sale? (Round your intermediate calculations to two decimal places.):

Question

Quizplus · Accepted Answer

First, we need to calculate the weighted average cost of each unit of inventory:
($5.50 x 1,150) + ($7.50 x 1,400) = $15,950
$15,950 / (1,150 + 1,400) = $6.50
This means that each unit of inventory has a cost of $6.50.
If the company sells 1,300 units, the cost of goods sold would be:
1,150 x $6.50 + 150 x $7.50 = $9,125
The amount of inventory that would appear on the balance sheet immediately following the sale would be:
(1,400 - 150) x $6.50 = $8,190
Therefore, the best choice is C, $8,250.

Koontz Company Uses the Perpetual Inventory Method and the Weighted-Average