Speedy Wireless, Inc., sells netbooks. The company began the fourth quarter of the year on October 1, 2009, with 500 units of inventory on hand. These units cost $250 each. The following transactions related to the company’s merchandise inventory occurred during the fourth quarter of 2009:
October 3 .......... Sold 400 units for $400 each
November 5 ......... Purchased 600 units for $275 each
November 29 .......... Sold 500 units for $425 each
December 1 ............ Purchased 700 units for $260 each
December 24 .......... Sold 600 units for $450 each
All unit costs include the purchase price and freight charges paid by Speedy Wireless.
Assume the company uses a perpetual record-keeping system and the weighted average cost flow method.
1. Calculate the cost of goods sold that will appear on the income statement for the quarter ending December 31, 2009.
2. Determine the cost of inventory that will appear on the balance sheet at December 31, 2009.