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Financial & Managerial Accounting
Found in: Page 259
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Wattan Company reports beginning inventory of 10 units at $60 each. Every week for four weeks it purchases an additional 10 units at respective costs of $61, $62, $65, and $70 per unit for weeks 1 through 4.

Compute the cost of goods available for sale and the units available for sale for this four-week period. Assume that no sales occur during those four weeks.

The total cost of goods available for sale equals $3,180.

See the step by step solution

Step by Step Solution

Step 1: Definition of Perpetual Inventory System

The method using the computer-based system to record the sales and purchase of inventory is known as a perpetual inventory system. This system reports the sale and purchase immediately.

Step 2: Cost Assigned to Ending Inventory

Particular

Units purchased

X

Per unit cost

=

Total cost

Beginning inventory

10

X

$60

=

$600

Week 1

10

X

$61

=

$610

Week 2

10

X

$62

=

$620

Week 3

10

X

$65

=

$650

Week 4

10

X

$70

=

$700

The total cost of goods available for sale$3,180

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