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Koontz Company uses the perpetual inventory method. On January 1, 2016, the company's first day of operations, Koontz purchased 400 units of inventory that cost $7.50 each. On January 10, 2016, the company purchased an additional 600 units of inventory that cost $9.00 each. If Koontz uses a weighted average cost flow method and sells 550 units of inventory, the amount of inventory appearing on balance sheet following the sale will be
approximately:
A. $3,780.
B. $4,738.
C. $3,080.
D. $3,713.
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- cost of goods available for sale would be $211,000.
{Beginning Inventory (200 units x $200 each) + Purchase 1 (500 units x $210 each) + Purchase 2 (300 units x $220) = $211,000 cost of goods available for sale}
-cost of goods sold would be $168,800.
{goods available for sale ($211,000/1,000 total units) = $211 per unit; 800 units x 211 = $168,800}
-ending inventory would be $42,200.
{Cost of goods
available for sale of $211,000 - $168,800 cost of goods sold = Ending Inventory $42,200}