Hi,

How do we deal with perpetual accounting systems for the weighted average cost method? For example:

Jan 1 (Beginning inventory): 2 units purchased at $2

Jan 7 purchase: 3 units at $3

Jan 12 sale: 4 units

Jan 19 purchase: 5 units at $5

Jan 29 sale: 3 units

So on Jan 12 the weighted average cost is $2.6. 4 units sold at $2.6 is $10.4. So COGS is $10.4 and ending inventory is 2.6.

This is where I am not sure how to proceed. On Jan 29 there is a sale of 3 units. How do I calculate the weighted average cost here? Do I take the average of the outstanding inventory cost and the new purchase ( ($2.6 + $5 * $5) / 6 = $5.52)?

Thanks for your help