Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
Date
Activities
Units Acquired at Cost
Units Sold at Retail
Mar.
1
Beginning inventory
170
units
@ $52.40/unit
Mar.
5
Purchase
260
units
@ $57.40/unit
Mar.
9
Sales
330 units
@ $87.40/unit
Mar.
18
Purchase
120
units
@ $62.40/unit
Mar.
25
Purchase
220 units
@ $64.40/unit
Mar.
29
Sales
200 units
@ $97.40/unit
Totals
770 units
530 units
Compute cost of goods available for sale and the number of units available for sale.
To determine the ending inventory and cost of goods sold for Anthony Company for the month of March, we need to calculate the following:
1. Calculate the total cost of the goods acquired (purchases):
- On March 5th, Anthony Company purchased 260 units at a cost of $57.40 per unit. Therefore, the total cost of this purchase is 260 units * $57.40/unit = $14,964.
- On March 18th, Anthony Company purchased 120 units at a cost of $62.40 per unit. Therefore, the total cost of this purchase is 120 units * $62.40/unit = $7,488.
- On March 25th, Anthony Company purchased 220 units at a cost of $64.40 per unit. Therefore, the total cost of this purchase is 220 units * $64.40/unit = $14,168.
Total cost of goods acquired = $14,964 + $7,488 + $14,168 = $36,620.
2. Calculate the cost of goods available for sale:
- Beginning inventory is given as 170 units at a cost of $52.40 per unit. Therefore, the cost of the beginning inventory is 170 units * $52.40/unit = $8,908.
Cost of goods available for sale = Cost of beginning inventory + Total cost of goods acquired = $8,908 + $36,620 = $45,528.
3. Determine the cost of goods sold:
Cost of goods sold is calculated using the formula: Cost of goods available for sale - Ending inventory.
To determine the ending inventory, we need to use the perpetual inventory system to track the remaining units after each sale.
- On March 9th, 330 units were sold at a retail price of $87.40 per unit. Therefore, the cost of goods sold for this sale is 330 units * $57.40/unit = $18,942.
Units remaining after this sale = Total units available for sale - Units sold = 770 units - 330 units = 440 units.
- On March 29th, 200 units were sold at a retail price of $97.40 per unit. Therefore, the cost of goods sold for this sale is 200 units * $57.40/unit = $11,480.
Units remaining after this sale = Units remaining after the previous sale - Units sold = 440 units - 200 units = 240 units.
Ending inventory = Units remaining after the final sale * Cost per unit = 240 units * $64.40/unit = $15,456.
4. Calculate the cost of goods sold:
Cost of goods sold = Cost of goods available for sale - Ending inventory = $45,528 - $15,456 = $30,072.
Therefore, for the month of March, Anthony Company had ending inventory of $15,456 and cost of goods sold of $30,072.