X hits on this document

PDF document

Inventories: Measurement - page 6 / 10

23 views

0 shares

0 downloads

0 comments

6 / 10

Inventories: Measurement

Spencer Company Inventory Transactions For the Month of September 2000

Beginning inventory Purchase of merchandise Purchase of merchandise Goods available for sale

2,000 500 1,000 3,500

$10.00 11.00 12.50 $10.86

Cost of goods sold: Merchandise sold in September

2,800

$10.86

Ending Inventory: Merchandise on hand

700

$10.86

Analysis of weighted average: Goods available for sale: Total cost Total units Weighted average

$38,000 3,500

$10.86

Date 9/1/00 9/10/00 9/25/00 9/30/00

9/30/00

Periodic Inventory System, Weighted Average

Transaction

Units

Price

Total $20,000 5,500 12,500 $38,000

$30,400

$7,600

  • Perpetual inventory system

If the entity is using the perpetual inventory system the calculation is based on the moving- average of the number of units and their respective costs after each purchase. This is called the moving-average method.

Example: Using the same information as above but assuming that Spencer Company uses the perpetual inventory system the calculation of cost of goods sold and ending inventory is much different. Each time the company purchases merchandise the new moving weighted average has to be recalculated. This average cost is then used to calculate the cost of goods sold on any subsequent sales transactions.

F:\Teaching\3321\web\module4\c8\tnotes\c8a.doc

3/12/2007

6

Document info
Document views23
Page views23
Page last viewedMon Dec 05 23:42:59 UTC 2016
Pages10
Paragraphs404
Words2656

Comments