ACCA Applied Knowledge · Financial Accounting · Inventories
Karta Co had opening inventory of 200 units at $4 each. It bought 300 units at $6 on 10 May and sold 350 units on 20 May. On 25 May it bought 100 units at $8. Using the continuous (perpetual) weighted average method, what is the value of closing inventory at 31 May?
Closing inventory is $1,580. After the 10 May purchase the average cost is $5.20, so the 350 units sold remove $1,820, leaving 150 units at $780. Adding the 25 May purchase of $800 gives 250 units valued at $1,580.
- A$1,100Correct
- B$1,000
- C$1,150
- D$1,200
Explanation
After 10 May: 500 units, cost 800+1,800=$2,600, average $5.20. Sale of 350 units at $5.20 = $1,820 removed, leaving 150 units at $780. After buying 100 units at $8 ($800), closing is 250 units valued at $1,580. Check: $2,600+$800-$1,820=$1,580.
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