Tom’s Trampoline Company sells commercial-size trampolines. The company’s most recent fiscal year began on August 1, 2009, and ended July 31, 2010. The company began the year with 500 units of inventory on hand. These units cost $500 each. The following transactions related to the company’s merchandise inventory occurred during the first quarter of the year:
August 14 ........... Purchased 200 units for $525 each
September 12 ........ Purchased 175 units for $490 each
October 20 ......... Purchased 100 units for $510 each
Total purchases ......... 475 units
During the quarter ending October 31, sales totaled 625 units.
Assume the company uses a periodic record-keeping system and the weighted average cost flow method.
1. Calculate the cost of goods sold that will appear on the company’s income statement for the quarter ending October 31.
2. Determine the cost of inventory that will appear on the company’s balance sheet at the end of October.