Samson Company had the following balances and transactions during 2013. $$\begin{array} { | l | l | }
\hline \text { Beginning inventory } & 10 \text { units at } \$ 70 \
\hline \text { March } 10 & \text { Sold } 8 \text { units } \
\hline \text { June } 10 & \text { Purchased } 20 \text { units at } \$ 80 \
\hline \text { October 30 } & \text { Sold } 15 \text { units } \
\hline
\end{array}$$
-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. $$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 10 \text { units at } \$ 70 \
\hline \text { March } 10 & \text { Sold } 8 \text { units } \
\hline \text { June } 10 & \text { Purchased } 20 \text { units at } \$ 80 \
\hline \text { October 30 } & \text { Sold } 15 \text { units } \
\hline
\end{array}$$ 
-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

Under the perpetual average-costing method, the cost of inventory is recalculated after each purchase. After selling 8 units, 2 units remain from the beginning inventory at $70 each. Then, 20 units are purchased at $80 each, making the total inventory 22 units at a total cost of $1,600 ($140 from the 2 units + $1,600 from the 20 units). The average cost per unit is $1,740 / 22 = $79.09. After selling 15 units, 7 units remain. The ending inventory value is 7 units * $79.09/unit = $553.63, rounded to $554.

Samson Company Had the Following Balances and Transactions During 2013