Kraus Company had the following transactions in its first mo

Kraus Company had the following transactions in its first month of operations. Compute the amount of ending inventory and cost of goods sold assuming that Kraus uses the average method under perpetual system (moving-average method).

Solution

Answer: Calculation of Average rate:

=[(1000*3.8)+(2000*4)+(6000*4.4)+(2000*4.75)]/(1000+2000+6000+2000)

=47700/11000

=4.27

Ending inventory=7000*4.27=29890

COGS=4000*4.27=17080