Summary Business Accounting

Question:

The following information is taken from the inventory records of the CNB Company:

Beginning inventory, 9/1/13 5,000 units @ $10.00

Purchases:

9/7 3,000 units @ $10.40

9/25 8,000 units @ $10.75

Sales:

9/10 4,000 units

9/29 5,000 units

7,000 units were on hand at the end of September.

Required:

1. Assuming that CNB uses a periodic inventory system and employs the average cost method, determine

cost of goods sold for September and September’s ending inventory.

2. Repeat requirement 1 assuming that the company uses a perpetual inventory system.



Answer:



Requirement 1

Cost of goods available for sale:

Beginning inventory (5,000 x $10.00) $ 50,000

Purchases:

3,000 x $10.40 $31,200

8,000 x $10.75 86,000 117,200



Cost of goods available (16,000 units) $167,200