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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. 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:
Expert Solution
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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