Intercontinental, Incorporated, uses a perpetual inventory system. Consider the following information about its inventory: August 1, purchased 10 units for $910 or $91 per unit; August 3, purchased 15 units for $1,590 or $106 per unit; August 14, sold 20 units; August 17, purchased 20 units for $2,300 or $115 per unit; August 28, purchased 10 units for $1,190 or $119 per unit; August 30, sold 23 units.

Using weighted average, the cost of goods sold for the sale of 23 units on August 30 is ____ and the inventory balance at August 30 is _____.



To calculate the cost of goods sold (COGS) and the inventory balance using the weighted average method, we follow these steps:

1. **Calculate Total Units and Cost of Inventory:**

   - **Beginning Inventory:**
     - August 1: 10 units at $91 = $910
   - **Purchases:**
     - August 3: 15 units at $106 = $1,590
     - August 17: 20 units at $115 = $2,300
     - August 28: 10 units at $119 = $1,190

   **Total Units Purchased:**
   - 10 + 15 + 20 + 10 = 55 units

   **Total Cost:**
   - $910 + $1,590 + $2,300 + $1,190 = $6,990

2. **Calculate Weighted Average Cost per Unit:**

   \[
   \text{Weighted Average Cost per Unit} = \frac{\text{Total Cost}}{\text{Total Units}} = \frac{6990}{55} \approx 127.09
   \]

3. **Calculate COGS for Sale of 23 Units on August 30:**

   \[
   \text{COGS} = \text{Units Sold} \times \text{Weighted Average Cost per Unit} = 23 \times 127.09 \approx 2,921.07
   \]

4. **Calculate Remaining Inventory:**

   **Units After Sale on August 30:**
   - Total Units After Sales: 55 - 20 (sold on August 14) - 23 (sold on August 30) = 12 units remaining.

   **Cost of Remaining Inventory:**

   \[
   \text{Remaining Inventory Cost} = 12 \times 127.09 \approx 1,525.08
   \]

**Final Results:**
- **COGS for the sale of 23 units on August 30:** $2,921.07
- **Inventory balance at August 30:** $1,525.08

Would you like more details or have any questions? Here are some related questions to consider:

1. How would the COGS change if a different inventory valuation method were used?
2. What factors might affect the weighted average cost calculation?
3. How does a perpetual inventory system differ from a periodic system?
4. Can you explain how inventory purchases affect cash flow?
5. What impact do sales returns have on COGS and inventory balance? 

**Tip:** Regularly update your inventory records to reflect real-time inventory levels and costs for more accurate financial reporting.

Using weighted average, the cost of goods sold for the sale of 23 units on August 30 is ____ and the inventory balance at August 30 is ____.

Discover how to calculate the cost of goods sold (COGS) and inventory balance using the weighted average method for Intercontinental, Incorporated's inventory transactions in August. Key data includes total costs and units sold.

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