Testbank Multiple Choice Question 99 The following information was available from the inventory records of Waterway Industries for January: Units Unit Cost Total Cost Balance at January 1 8800 $9.80 $86240 Purchases: January 6 5800 10.22 59276 January 26 8000 10.76 86080 Sales January 7 (7700 ) January 31 (11000 ) Balance at January 31 3900 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? (Round average cost per unit to 3 decimal places, e. g. 1.485.) $40054. $39965. $40533. $40655.

$40,529 approx

Explanation:

The computation of inventory at January 31, using the moving-average inventory method is shown below:-

Jan 1 Opening balance of purchase = 8,800 × $9.80  

= $86,240

Jan 6 Total cost of purchase = 5,800 × $10.22

= $59,276

Jan 6 Closing balance per unit = ($86,240  + $59,276 ) ÷ (8,800 + 5,800)

= $145,516 ÷ $14,600

= $9.966

Jan 7 Cost of goods sold = 7,700 × $9.966

= $76,738

Closing balance = 6,900 × $9.966

= $68,765

(14,600 - 7,700 = 6,900)

Jan 26 Total cost of purchase = 8,000 × $10.76

= $86,080

= ($86,080 + $68,765) ÷ (6,900 + 8,000)

= $154,845 ÷ 14,900

= $10.392

Jan 27 Cost of goods sales (Sales) = 11,000 × $10.392

= $114,312

Closing stock = 3,900 × $10.392

= $40,529 approx

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