Towing Company employs a periodic inventory system and sells its inventory to customers for $34 per...

Name: Towing Company employs a periodic inventory system and sells
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Accounting

Towing Company employs a periodic inventory system and sells its inventoryto customers for $34 per unit. Towing Company had the following inventoryinformation available for the month of May:May 1  Beginning inventory 2,200 units @ $17 cost per unitMay 8  Sold 1,700 unitsMay 13  Purchased 1,800 units @ $13 cost per unitMay 18  Sold 1,600 unitsMay 21  Purchased 1,300 units @ $23 cost per unitMay 22  Purchased 1,100 units @ $15 cost per unit May 28  Sold 1,300 unitsMay 30  Purchased 1,600 units @ $10 cost per unitDuring May, Towing Company reported operating expenses of $49,000 and hadan income tax rate of 32%.Calculate the dollar amount of ending inventory shown on Towing Company'sMay 31 balance sheet using the weighted average method.

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3.7 Ratings (600 Votes)

Correct Answer: Value Of Ending Inventory $ 52,360.00

Solution :

	Units	Cost per unit	value
Beginning Balance	2200	$ 17.00	$ 37,400.00
Purchases
13-May	1800	$ 13.00	$ 23,400.00
21-May	1300	$ 23.00	$ 29,900.00
22-May	1100	$ 15.00	$ 16,500.00
30-May	1600	$ 10.00	$ 16,000.00


Total units purchased in the month	8000		$ 1,23,200.00

Average Cost of Inventory

Units	(A)	8000
Total Cost	(B)	$ 1,23,200.00
Average Cost	(C=B/A)	$ 15.40

Weighted Average method
Total Units Available for sale		8000
Units Sold	1700+1300+1600=4600	4600
Closing Stock in Units		3400

Valuation
Ending Inventory	3400	@	$ 15.40	$ 52,360.00

Value Of Ending Inventory				$ 52,360.00

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