Williams Co. uses a periodic inventory system. The following are inventory transactions for the month of March: 3/1 Beginning Inventory 5,000 units at $2 3/7 Purchase 2,500 units at $3 3/16 Purchase 2,500 units at $4 3/26 Sales at $8 per unit 7,500 units Williams uses the weighted average method to determine the value of its inventory. What amount should Williams report as cost of goods sold on the income statement for the month of January?

Williams reports as cost of goods sold on the income statement the amount: $20,625

Explanation:

March: 3/1 Beginning Inventory 5,000 units at $2, total: $10,000

March: 3/7 Purchase 2,500 units at $3, total: $7,500

March: 3/16 Purchase 2,500 units at $4, total: $10,000

In March,

Total inventory purchased:

5000 units, cost: $7,500 + $10,000 = $17,500

Williams Co. uses a periodic inventory system and weighted average method, the cost per unit the company sold:

($10,000 + $17,500) / (5,000+5,000) = $27,500/10,000 = $2,75

Williams sold 7,500 units, Cost of goods sold = $2,75 x 7,500 = $20,625