Shamrock Company uses a perpetual inventory system. Beginning inventory is 3,100 T-shirts at a cost $2.50 per shirt. During the year Shamrock had the following inventory transactions:

All purchases and sales are on account. Jan. 12-

Purchased

620 units

@ 2.15 per unit

Feb. 18

Sold

1,650 unts @ 6.50 per unit

July 1 Purchased


1,600 units @ 2.65 per unit

Aug. 29 Sold

1,700 units

@ 7.50 per unit

Dec. 19 Purchased

620 units

@ 3.05 per unit

Question 4 of. 16

/ 10,

Shamrock Company uses a perpetual inventory system. Beginning inventory is 3,100 T-shirts at a cost $2.50 per shirt. During the year Shamrock had the following inventory transactions:

All purchases and sales are on account.

Calculate the cost of goods sold and ending inventory using weighted average. (Round the weighted average cost per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 5,275.)

To calculate the cost of goods sold (COGS) and ending inventory using the weighted average method under a perpetual inventory system, we'll follow the steps for each transaction, updating the average cost after each purchase.

### Beginning Inventory:
- **Quantity:** 3,100 units
- **Unit Cost:** $2.50
- **Total Cost:** $ 3,100 \times 2.50 = \$7,750 $

### Transactions:

1. **January 12 - Purchase**
   - **Quantity:** 620 units
   - **Unit Cost:** $2.15
   - **Total Cost of Purchase:** $ 620 \times 2.15 = \$1,333 $
   - **New Quantity:** $ 3,100 + 620 = 3,720 $ units
   - **New Total Cost:** $ 7,750 + 1,333 = \$9,083 $
   - **New Weighted Average Cost:** $ \frac{9,083}{3,720} = \$2.44 $ (rounded to 2 decimals)

2. **February 18 - Sale**
   - **Quantity Sold:** 1,650 units
   - **COGS:** $ 1,650 \times 2.44 = \$4,026 $ (rounded to nearest dollar)
   - **Remaining Quantity:** $ 3,720 - 1,650 = 2,070 $ units
   - **Remaining Total Cost:** $ 9,083 - 4,026 = \$5,057 $

3. **July 1 - Purchase**
   - **Quantity:** 1,600 units
   - **Unit Cost:** $2.65
   - **Total Cost of Purchase:** $ 1,600 \times 2.65 = \$4,240 $
   - **New Quantity:** $ 2,070 + 1,600 = 3,670 $ units
   - **New Total Cost:** $ 5,057 + 4,240 = \$9,297 $
   - **New Weighted Average Cost:** $ \frac{9,297}{3,670} = \$2.53 $ (rounded to 2 decimals)

4. **August 29 - Sale**
   - **Quantity Sold:** 1,700 units
   - **COGS:** $ 1,700 \times 2.53 = \$4,301 $ (rounded to nearest dollar)
   - **Remaining Quantity:** $ 3,670 - 1,700 = 1,970 $ units
   - **Remaining Total Cost:** $ 9,297 - 4,301 = \$4,996 $

5. **December 19 - Purchase**
   - **Quantity:** 620 units
   - **Unit Cost:** $3.05
   - **Total Cost of Purchase:** $ 620 \times 3.05 = \$1,891 $
   - **New Quantity:** $ 1,970 + 620 = 2,590 $ units
   - **New Total Cost:** $ 4,996 + 1,891 = \$6,887 $
   - **New Weighted Average Cost:** $ \frac{6,887}{2,590} = \$2.66 $ (rounded to 2 decimals)

### Final Values:

- **Cost of Goods Sold (COGS):**
  - **February 18 Sale:** \$4,026
  - **August 29 Sale:** \$4,301
  - **Total COGS:** $ 4,026 + 4,301 = \$8,327 $

- **Ending Inventory:**
  - **Quantity:** 2,590 units
  - **Unit Cost:** $2.66
  - **Total Cost of Ending Inventory:** $ 2,590 \times 2.66 = \$6,887 $

### Final Answers:
- **Cost of Goods Sold:** \$8,327
- **Ending Inventory:** \$6,887

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Do you need further details or explanations on this? Would you like to ask any other questions?

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**Related Questions:**
1. How does the perpetual inventory system differ from the periodic system?
2. What is the impact of using FIFO instead of the weighted average method?
3. How does inflation affect the weighted average cost method?
4. How would a price increase in the last purchase affect the COGS?
5. Can the weighted average method be used in a periodic inventory system?
6. What are the advantages of using a perpetual inventory system?
7. How does the number of transactions affect the complexity of using the weighted average method?
8. What are some common challenges companies face when implementing a perpetual inventory system?

**Tip:** Always double-check the rounding rules in inventory calculations to ensure consistency, especially in financial reporting.

Learn how to calculate the cost of goods sold (COGS) and ending inventory using the weighted average method in perpetual inventory systems. Step-by-step solution with transaction details and final calculations. Perfect for professionals in accounting and inventory management.

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