Stephens Inc. is a wholesaler of photography equipment. The activity for the VTC

Question

Stephens Inc. is a wholesaler of photography equipment. The activity for the VTC cameras during July is
shown below:
Balance/
Date Transaction Units Cost
July 1 Inventory 2,000 $36.00
7 Purchase 3,000 37.00
12 Sales 3,600
21 Purchase 5,000 37.88
22 Sales 3,800
29 Purchase 1,600 38.11
If Stephens Inc uses moving average perpetual inventory system, the ending inventory for VTC cameras at July 31 is reported as
a. $153,400
b.$156,912
c.$158,736
d.$159,464

I need to see step by step on how to work this problem out I am so confused.

Explanation / Answer

Date Transactions Units Cost Inventory Units Moving Average Unit Cost
July 1 Inventory 2000 $36 2000 $36
July 7 Purchase 3,000 $37   5000 $36.6 (*1)
July 12 Sale (3600) ?? 1400 $36.78
July 21 Purchase    5,000 37.88 6400 $45.88 (*2)
July 22 Sale (3,800) ?? 2600 $53.88
July 29 purchase 1,600 38.11 4200 $42.92 (*3)
July 31 Ending Inventory ??

(*1) Average cost of 5000 units

= (2000*36 + 3000*37)/(2000+3000)
= 36.6 U.S. dollars
Cost of goods sold on july 12 = 3600x$36.6 = $ 131,760

(*2) Average cost of 6400 units

= (1400*36.6 + 6400x$45.88) / (1400 + 5000)
= $53.88

(*3) Average cost of 4200 units
= (2600x$45.88 + 1600x$38.11) / (2600 + 1600)
= ($11,475 + $3,000) / 1,100 = $14,475 / 1,100 = $13.16

Cost of goods sold on july 22 = 3800x$45.88 = $174,344

  Total cost of goods sold
           = 3600x$36.6 + 3800x$45.88
= $306,104

    Cost of ending inventory
           = Beginning inventory + Cost of purchases - Cost of goods sold
           = $72,000 + (3000x$37 + 5000x$37.88 + 1600x$38.11) - $306,104
= $127 272

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