Question ABCCompany employs a periodic inventory system and sells its inventoryt
ID: 2458062 • Letter: Q
Question
Question
ABCCompany employs a periodic inventory system and sells its inventoryto customers for $25 per
unit. ABCCompany had the following inventory information available for themonth of May:
May1 Beginning inventory 5,000 units @ $9 cost perunit
May6 Purchased 4,000 units @ $11 cost per unit
May8 Sold 3,000 units
May13 Purchased 2,000 units @ $5 cost per unit
May18 Sold 2,500 units
May21 Purchased 2,500 units @ $8 cost per unit
May28 Sold 1,800 units
May30 Purchased 2,000 units @ $18 cost per unit
Calculatethe amount of gross profit shown on ABC Company'sincome statement for May using the
weighted average method. Do not use decimals inyour answer.
Question
Explanation / Answer
Reffered last problemaccounting 5.7 Weighted AverageMethod Average cost perunit = = Total cost of goods available for sale / totalnumber of units available for sale = $255000 / 15500 = $16.45 or $16 Ending Inventory = 8200 units X $16 = $131,200 Cost of goods sold = 7300 units X $16 $116,800 Grossprofit = Sales - cost of goodssold = (7300 X $25) - $116800 = $182500 - $116800 = $65,700 Total No. of units available forsale 15500 units No of units sold 7300 units Remaining Inventory 8200 units Total cost of goods available forsale = (5000 X $9) + (4000 X $11) +(2000 X $5) +(2500 X $8) + (2000 X $18 ) = $255,000