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A wholesaler had opening inventory of 300 units of product Emm valued at $25 per unit at the beginning of January. The following receipts and sales were recorded during January.
Date 2 Jan 12 Jan 21 Jan 29 Jan
400
Issues 250 200 75
The purchase cost of receipts was $25.75 per unit. Using a weighted average method of valuation,calculate the value of closing inventory at the end of January.Answer)4492
Sir can you help me out with this question? I cant seem to figure out the workings for this even after applying your formula.
2 Jan 400 (receipts)
12 jan 250 (issues)
21 jan 200 (I)
29 Jan 75(I)this is the table for the question**
The started with 300 units at $25 each, so a total of $7,500.
They bought another 400 units at $25.75 each, so a total of $10,300.So in total they now have 700 units at a total cost of $17,800.
There are no more purchases, and so all the issues are at an average cost of $17,800/700 = $25.43 per unit.
The closing inventory is 700 – 250 – 200 – 75 = 175 units.
They are therefore valued at 175 x $25.43 = $4,450.
(The answer is your book is different simply because of roundings which does not matter in the exam)
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