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CHAPTER 8: Inventory, COGS, perpetual, Weighted- average inventory, Moving -average method

The following information was available from the inventory records of Waterway Industries for January:
Units Unit Cost Total Cost
Balance at January 1 9200 $9.71 $89332
Purchases:
January 6 6300 10.23 64449
January 26 8200 10.69 87658
Sales
January 7 (7400)
January 31 (11100)
Balance at January 31 5200
Assuming that Waterway maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar?
Avg. on 1/6 (89332+64449)($) : (9200+6300)(units)
$153781 ÷ 15500 = $9.921/unit
7/1 7400 * 9.921 = 73415.4
1500 - 7400 = 8100 Units remains in inventory
1/26 Add: 8100 * 9.921 = 80360 ($)
8200* 10.69 = 87658 ($)
8100 + 8200 = 16300 Unit in inventory on 1/26
80360+87658=168018 (4)
168018 : 16300 =10.3.8 $/unit ending 1/26
$168024 ÷ 16300 = $10.308/unit
1/31 16300 - 11100 = 5200 units remains on 1/31
5200 * 10.308 = $53602.
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Terms in this set (24)
The following information was available from the inventory records of Waterway Industries for January:
Units Unit Cost Total Cost
Balance at January 1 9200 $9.71 $89332
Purchases:
January 6 6300 10.23 64449
January 26 8200 10.69 87658
Sales
January 7 (7400)
January 31 (11100)
Balance at January 31 5200
Assuming that Waterway maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar?
Avg. on 1/6 (89332+64449)($) : (9200+6300)(units)
$153781 ÷ 15500 = $9.921/unit
7/1 7400 * 9.921 = 73415.4
1500 - 7400 = 8100 Units remains in inventory
1/26 Add: 8100 * 9.921 = 80360 ($)
8200* 10.69 = 87658 ($)
8100 + 8200 = 16300 Unit in inventory on 1/26
80360+87658=168018 (4)
168018 : 16300 =10.3.8 $/unit ending 1/26
$168024 ÷ 16300 = $10.308/unit
1/31 16300 - 11100 = 5200 units remains on 1/31
5200 * 10.308 = $53602.
Image: The following information was available from the inventory records of Waterway Industries for January: Units Unit Cost Total Cost Balance at January 1 9200 $9.71 $89332 Purchases: January 6 6300 10.23 64449 January 26 8200 10.69 87658 Sales January 7 (7400) January 31 (11100) Balance at January 31 5200 Assuming that Waterway maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar? Avg. on 1/6 (89332+64449)($) : (9200+6300)(units) $153781 ÷ 15500 = $9.921/unit 7/1 7400 * 9.921 = 73415.4 1500 - 7400 = 8100 Units remains in inventory 1/26 Add: 8100 * 9.921 = 80360 ($) 8200* 10.69 = 87658 ($) 8100 + 8200 = 16300 Unit in inventory on 1/26 80360+87658=168018 (4) 168018 : 16300 =10.3.8 $/unit ending 1/26 $168024 ÷ 16300 = $10.308/unit 1/31 16300 - 11100 = 5200 units remains on 1/31 5200 * 10.308 = $53602.
Inventory
Raw material: traced directly to product
WIP: some work done, not finished
Finished goods: complete, unsold
Supplies inventory: oils, nails, cleaning materials... Not primary materials.
perpetual inventory system
records all purchases and sales (issues) of goods directly in the Inventory account as they occur
f.o.b shipping point
f.o.b destination
If a supplier ships goods to Walgreens f.o.b. shipping point, title passes to Walgreens when the supplier delivers the goods to the common carrier, who acts as an agent for Walgreens. (The abbreviation f.o.b. stands for free on board.) (buyer owns when good shipped)
If the supplier ships the goods f.o.b. destination, title passes to Walgreens only when it receives the goods from the common carrier. "Shipping point" and "destination" are often designated by a particular location, for example, f.o.b. Denver. (buyer owns when good recieved)
Period Cost
Indirectly related to the acquisition or production of goods.
Ex: selling expenses, general and administrative expenses: directly related to COGS, interest (not part of inventory cost because indirectly related to the immediate production process)