{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

2011 Financial 4 Text Updates

2011 Financial 4 Text Updates - This first page gives a...

This preview shows pages 1–4. Sign up to view the full content.

This first page gives a listing of the corrected lecture text pages that follow. Print these corrected pages and insert in the lecture text. FINANCIAL Date Added Lecture Page Number Description 03/17/2011 F-4 28 Text change 03/17/2011 F-4 43 Add text 03/17/2011 F-4 46 Correction of topic reference 03/24/2011 F-4 22 Delete text 03/24/2011 F-4 23 Add text 03/24/2011 F-4 54 Change text 04/18/2011 F-4 23 Add text

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Financial 4 Becker Professional Education | CPA Exam Review F4- 28 ©2010 DeVry/Becker Educational Development Corp. All rights reserved. E X A M P L E — W E I G H T E D A V E R A G E M E T H O D Facts and Requirement: Assume the same information for Helix Corporation as in the example for FIFO (above). What are the amounts of ending inventory and cost of goods sold under the weighted average method? Solution: Unit Cost Units Purchased Total \$4.25 4,000 \$ 17,000 4.50 2,000 9,000 4.75 3,000 14,250 Total 9,000 \$40,250 Weighted average cost per unit = \$4.4722 (\$40,250/9,000) Cost of goods sold = \$17,889 (4,000 units × \$4.4722) Ending inventory = \$22,361 (5,000 units × \$4.4722) D. Moving Average Method The moving average method computes the weighted average cost after each purchase by dividing the total cost of inventory available after each purchase (inventory plus current purchase) by the total units available after each purchase. The moving average is more current than the weighted average. A perpetual inventory system is necessary to use the moving average method. E X A M P L E — M O V I N G A V E R A G E M E T H O D Facts and Requirement: Assume the same information for Helix Corporation as in the example for FIFO (above). What are the amounts of ending inventory and cost of goods sold under the moving average method? Solution: Purchases/(Sales) Inventory Balances (rounded) Quantity Cost Total Quantity Average Cost Total 4,000 \$4.25 \$17,000 4,000 \$4.25 \$17,000 (3,000) \$4.25 (\$12,750) 1,000 \$4.25 \$4,250 2,000 \$4.50 \$9,000 3,000 \$4.4167 1 \$13,250 (1,000) \$4.4167 (\$4,417) 2,000 \$4.4167 \$8,833 3,000 \$4.75 \$14,250 5,000 \$4.6166 2 \$23,083 1 Weighted average cost per unit = (\$4,250 + \$9,000) / 3,000 = \$4.4167 2 Weighted average cost per unit = (\$8,833 + \$14,250) / 5,000 = \$4.6166 Cost of goods sold is \$17,167 (\$12,750 + \$4,417) Ending inventory is \$23,083