Williams Company had the following balances and transactions during 2013. $$\begin{array} { | l | l | }
\hline \text { Beginning inventory } & 10 \text { units at } \$ 70 \
\hline \text { June } 10 & \text { Purchased } 20 \text { units at } \$ 80 \
\hline \text { December } 30 & \text { Sold } 15 \text { units } \
\hline \text { December } 31 & \text { Replacement cost } \$ 78 \
\hline
\end{array}$$ 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

Williams Company had the following balances and transactions during 2013. $$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 10 \text { units at } \$ 70 \
\hline \text { June } 10 & \text { Purchased } 20 \text { units at } \$ 80 \
\hline \text { December } 30 & \text { Sold } 15 \text { units } \
\hline \text { December } 31 & \text { Replacement cost } \$ 78 \
\hline
\end{array}$$ 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

The perpetual average-costing method assigns the average cost of all units available for sale during the period to each unit sold. The average cost is calculated as follows:Beginning inventory (10 units x $70) = $700Purchases (20 units x $80) = $1,600Total cost of goods available for sale = $2,300Units available for sale = 30 unitsAverage cost per unit = $2,300 / 30 units = $76.67Ending inventory (15 units x $76.67) = $1,150

Williams Company Had the Following Balances and Transactions During 2013