Berring Sales uses the average-cost method. The partially completed inventory record for January appears below. On January 14, the company sold 10 units. On January 29, the company sold 50 units. Complete the inventory record and calculate the Inventory balance at the end of January. (Please round to the nearest whole dollar.)

Question

Berring Sales uses the average-cost method. The partially completed inventory record for January appears below.  On January 14, the company sold 10 units. On January 29, the company sold 50 units. Complete the inventory record and calculate the Inventory balance at the end of January. (Please round to the nearest whole dollar.)

Quizplus · Accepted Answer

To complete the inventory record, we need to calculate the cost of goods sold (COGS) for each sale and update the inventory balance accordingly. Here are the steps:

1. Calculate the cost per unit: We start with the beginning inventory ($700) and add the purchases ($1,400) to get the total cost of goods available for sale ($2,100). Then we divide by the total number of units available for sale (200) to get the average cost per unit: $2,100 ÷ 200 = $10.50.

2. Calculate the cost of goods sold (COGS) for the first sale: The company sold 10 units on January 14, so we multiply the cost per unit ($10.50) by the number of units sold (10) to get the COGS for this sale: $105.

3. Update the inventory record: We subtract the COGS for the first sale ($105) from the beginning inventory ($700) to get the new balance of inventory after the first sale ($595). We also update the number of units sold (10) and the total COGS ($105).

4. Calculate the cost of goods sold (COGS) for the second sale: The company sold 50 units on January 29, so we multiply the cost per unit ($10.50) by the number of units sold (50) to get the COGS for this sale: $525.

5. Update the inventory record: We subtract the COGS for the second sale ($525) from the new balance of inventory after the first sale ($595) to get the ending inventory balance ($70). We also update the number of units sold (50) and the total COGS ($630).

Therefore, the answer is C) $141 (rounded to the nearest dollar).

Berring Sales Uses the Average-Cost Method