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15E_3

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Horngren'S Financial And Managerial Accounting
Found in: Page 361

Short Answer

Question: Super Mart, a regional convenience store chain, maintains milk inventory by the gallon.

The first month’s milk purchases and sales at its Freeport, Florida, location follow:

Nov. 2 Purchased 11 gallons @ $2.15 each

6 Purchased 2 gallons @ $2.80 each

8 Sold 6 gallons of milk to a customer

13 Purchased 3 gallons @ $2.85 each

14 Sold 4 gallons of milk to a customer

Requirements

3. Determine the amount that would be reported in ending merchandise inventoryon November 15 using the weighted-average inventory costing method. Round allamounts to the nearest cent.

The ending inventory on Nov.15 amounts to $14.58

See the step by step solution

Step by Step Solution

Step-by-Step-SolutionStep1: Perpetual Inventory weighted average Method

The Perpetual Inventory method is a system of maintaining inventory records continuously after every purchase and sale. The weighted average is a method of allocating costs based on the average cost of all inventory throughout a period.

So perpetual inventory under the weighted average method maintains the continuous record of inventory based on the average cost of every purchase or sale.

Step 2: Calculation of ending inventory

Date

Purchase/opening

Sales

Balance

Units

Cost per unit

Amount

Units

Cost per unit

Amount

Units

Cost per unit

Amount

Nov 2

11

$2.15

$23.65

11

$2.15

$23.65

6

2

$2.80

$5.6

13

$2.25

$29.25

8

6

$2.25

$13.5

7

$2.25

$15.75

13

3

$2.85

$8.55

10

$2.43

$24.3

14

4

$2.43

$9.72

6

$2.43

$14.58

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