Samson Company had the following balances and transactions during 2012. $$\begin{array} { | l | l | }
\hline \text { Beginning inventory } & 10 \text { units at } \$ 70 \
\hline \text { March } 10 & \text { Sold } 8 \text { units } \
\hline \text { June } 10 & \text { Purchased } 20 \text { units at } \$ 80 \
\hline \text { October 30 } & \text { Sold } 15 \text { units } \
\hline
\end{array}$$ What would the company's Inventory amount be on the December 31,2012 balance sheet if the periodic average-costing method is used? (Answers are rounded to the nearest dollar.)

Question

Samson Company had the following balances and transactions during 2012. $$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 10 \text { units at } \$ 70 \
\hline \text { March } 10 & \text { Sold } 8 \text { units } \
\hline \text { June } 10 & \text { Purchased } 20 \text { units at } \$ 80 \
\hline \text { October 30 } & \text { Sold } 15 \text { units } \
\hline
\end{array}$$ What would the company's Inventory amount be on the December 31,2012 balance sheet if the periodic average-costing method is used? (Answers are rounded to the nearest dollar.)

Quizplus · Accepted Answer

Under the periodic average-costing method, the cost of ending inventory and the cost of goods sold are determined at the end of the accounting period based on the average cost of all items available for sale during the period. Here, Samson Company starts with 10 units at $70 each and purchases an additional 20 units at $80 each. This gives a total of 30 units at a total cost of $10 \times \$70 + 20 \times \$80 = \$700 + \$1600 = \$2300$. The average cost per unit is $\$2300 / 30 = \$76.67$. By the end of the year, 23 units have been sold (8 + 15), leaving 7 units in inventory. The ending inventory value is $7 \times \$76.67 = \$537$ (rounded to the nearest dollar).

Samson Company Had the Following Balances and Transactions During 2012