The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A

The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A.

Instructions

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method.

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.

3. Determine the ending inventory cost as of March 31.

Answer:

1.

Unit Total TotalTotal

Quantity Cost Cost Quantity Unit Cost Cost Quantity Unit Cost Cost

 Jan. 17,500 75.00 562,500

10 22,500 85.00   1,912,50030,000 82.50 2,475,000

2811,250 82.50 928,125 18,750 82.50 1,546,875

303,750 82.50 309,375 15,000 82.50 1,237,500

 Feb. 51,500 82.50 123,750 13,500 82.50 1,113,750

10 54,000 87.50   4,725,00067,500 86.50 5,838,750

1627,000 86.50 2,335,500 40,500 86.50 3,503,250

2825,500 86.50 2,205,750 15,000 86.50 1,297,500

 Mar. 5 45,000 89.50   4,027,50060,000 88.75 5,325,000

1430,000 88.75 2,662,500 30,000 88.75 2,662,500

25 7,500 90.00   675,00037,500 89.00 3,337,500

3026,250 89.00 2,336,250 11,250 89.00 1,001,250

31  Balances10,901,250 1,001,250

2. Total sales………………………………………………………………… $19,875,000

Total cost of merchandise sold……………………………………… 10,901,250

Gross profit……………………………………………………………… $ 8,973,750

*Total sales = $1,687,500 + $562,500 + $225,000 + $4,320,000 + $4,080,000 + $4,800,000 + $4,200,000 = $19,875,000

3. $1,001,250 (11,250 × $89.00)