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Homework answers / question archive / During the year ended December 31, 2021, Blake Company sold 12,000 cases of Product T for $120,000

During the year ended December 31, 2021, Blake Company sold 12,000 cases of Product T for $120,000

Finance

During the year ended December 31, 2021, Blake Company sold 12,000 cases of Product T for $120,000. Facts related to its beginning inventory and purchases are as follows: 

 

      January 1 Beginning inventory      5,000 cases @ $4.00

 

      February 10 Purchase             3,000 cases @ $5.00

 

      April 23 Purchase                8,000 cases @ $4.50

 

      August 5 Purchase               2,000 cases @ $5.00

 

 

   For the year ended December 31, 2021, what would the following look like:

 

      Total Goods Available for Sale in units:

 

      Total Goods Available for Sale in $:

 

      The number of units in ending inventory:

 

      The average cost of one case of Product T:

 

 The value of the ending inventory using the average cost method:

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Computation of Total Goods Available for Sale in units:

Units available for sale = 5,000 + 3,000 + 8,000 + 2,000
Units available for sale = 18,000

 

Computation of Total Goods Available for Sale in $:

Cost of goods available for sale = 5,000 * $4.00 + 3,000 * $5.00+ 8,000 * $4.50 + 2,000 * $5.00
Cost of goods available for sale = $81,000

 

Units sold = 12,000

 

Computation of Number of units in ending inventory:

Units in ending inventory = Units available for sale - Units sold
 = 18,000 - 12,000
Units in ending inventory = 6,000

 

Computation of Average cost of one case of Product T:

Average cost per unit = Cost of goods available for sale / Units available for sale
 = $81,000 / 18,000
Average cost per unit = $4.50

 

Computation of Value of the Ending Inventory using the Average Cost Method:

Value of Ending Inventory = Average Cost per Unit * Units in Ending Inventory
= $4.50 * 6,000
Value of Ending Inventory = $27,000

 

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