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### Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

# Steel Mill began August with 50 units of iron inventory that cost $35 each. During August, the company completed the following inventory transactions: Units Unit Cost Unit Sales PriceAug. 3 Sale 45$ 858 Purchase 90 $5421 Sale 85 8830 Purchase 15 58Requirements3. Prepare a perpetual inventory record for the merchandise inventory using the weighted-average inventory costing method. The ending inventory at average cost comes out to be$1,400.

See the step by step solution

## Step-by-Step SolutionStep 1: Weighted average costing method

The weighted average costing method is the mid-way between the FIFO method and the LIFO method. In the weighted average method, the average cost is computed after every purchase, and the goods are sold on the immediate average cost. The average cost is the mean value of FIFO cost and LIFO cost.

## Step 2: Perpetual inventory table under the weighted average method

 Purchases Cost of goods sold Inventory on hand Date Qty Unit cost Total Cost Qty Unit cost Total Cost Qty Unit Cost Total Cost Aug 1 50 $35$1,750 Aug 3 45 $35$1,575 5 $35$175 Aug 8 90 $54$4,860 95 $53$5,035 Aug 21 85 $53$4,505 10 $53$530 Jan 26 15 $58$870 25 $56$1,400 Total 105 $5,730 130$6,080 25 $56$1,400