Question

ABC Inc. sells socks. During February 2016, its inventory records for one brand of its socks were as follows:

	Quantity	Price per pair	Total
Beginning Inventory	10 pairs	$20.00	= $200
February 6 Purchase	4 pairs	$25.00	= $100
February 10 Purchase	5 pairs	$27.40	= $137
February 15 Sale	7 pairs	N/A

See information above. Using this information, determine ending inventory under the weighted-average method. Assume the company used a periodic inventory costing system.

Select one:

a. $297

b. $276

c. $161

d. $252

Based on the information below and considering that this company paid $100,000 in cash to its suppliers during the year, what is the company's cost of goods sold for 2015? Assume that the only source of Accounts Payable is the purchase of inventory on credit.

	1/1/2015	12/31/2015
Inventory	$122,400	$122,600
Accounts payable	$54,000	$0

Select one:

a. $45,800

b. $200

c. None of these

d. $54,200

Answer 1

Ans: b.$276

Working:

ending inventory under the weighted-average method:

weighted-average cost per unit = cost of goods available for sale/Number of units available for sale

=(10*$20+4*$25+5*$27.4)/10+4+5

=$23 per unit

Ending inventory = goods available for sale – sales

                            =19-7

                            =12 pairs

So cost of ending inventory = 12 pairs*$23=$276

2)Ans:a$ 45,800

Working:

Purchases = Cash paid to suppliers + Ending balance of accounts payable - Opening balance of accounts payable

= $100,000 + 0 - $54,000 = $46,000

Cost of goods sold = Opening inventory + Purchases - Ending inventory

= $122,400 + $46,000 - $122,600

=$45,800