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The classified Balance Sheet will subsection the assets section as follows:
A. Current Assets and Property, Plant, and Equipment.
B. Other Assets and Property, Plant and Equipment.
C. Current Assets and Other Assets.
D. Current Assets and Short-Term Assets.
The following lots of a particular comsmodity were available for sale during the year:
Beginning inventory 10 units at $60
First purchase 25 units at $65
Second purchase 30 units at $68
Third purchase 15 units at $75
There are 25 units of the commodity on hand at the end of the year. What is the amount of the inventory at the end of the year using the average cost method?

Answer :

Tundexi

Answer:

1. a current assets and Property,Plant and Equipment

2. $1,684.37

Explanation:

1. Classified balance sheet is classified into current assets and Property, Plant and Equipment (long term liabilities) and the current assets are classified on the basis of liquidity.

2. Beginning inventory    10 units

First purchase                  25 units

Second purchase             30 units

Third purchase                 15 units

Units available for sale   80 units

Ending inventory (in units) = 25 units

Units sold = Units available for sale - Ending inventory (in units)

Units sold = 80-25

Units sold = 55 units

Beginning inventory   10 units*$60      $600

First purchase             25 units*$65      $1,625

Second purchase        30 units*$68     $2,040

Third purchase             15 units*$75      $1,125  

Cost of goods available for sale          $5,390

Weighted average cost per unit = Cost of goods available for sale / Units available for sale

Weighted average cost per unit = 5,390 / 80

Weighted average cost per unit = $67.375

Cost of goods sold = Units sold * Weighted average cost per unit

Cost of goods sold = 55 units * $67.375

Cost of goods sold = $3,705.625

Cost of goods sold = $3,705.63

Ending inventory = Cost of goods available for sale - Cost of goods sold

Ending inventory = $5,390 - $3,705.63

Ending inventory = $1,684.37

Thus, the amount of the inventory at the end of the year using the average cost method is $1,684.37

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