drop table sales
CREATE TABLE Sales (DayCount smallint, channel varchar(50), Sales money)
CREATE CLUSTERED INDEX ndx_DayCount ON Sales(DayCount)
go

SET NOCOUNT ON

DECLARE @DayCount smallint, @Sales money, @channel varchar(50)
SET @DayCount = 0
SET @Sales = 10
set @channel = 'a'

WHILE @DayCount < 10000
BEGIN
  INSERT Sales VALUES (@DayCount,@channel, @Sales)
  SET @DayCount = @DayCount + 1
  SET @Sales = @Sales + 15
  set @channel = case 
                    when right(cast(@daycount as varchar), 1) = 0 then 'a'
                    when right(cast(@daycount as varchar), 1) = 1 then 'b'
                    when right(cast(@daycount as varchar), 1) = 2 then 'c'
                    when right(cast(@daycount as varchar), 1) = 3 then 'd'
                    when right(cast(@daycount as varchar), 1) = 4 then 'e'
                    when right(cast(@daycount as varchar), 1) = 5 then 'f'
                    when right(cast(@daycount as varchar), 1) = 6 then 'g'
                    when right(cast(@daycount as varchar), 1) = 7 then 'h'
                    when right(cast(@daycount as varchar), 1) = 8 then 'i'
                    when right(cast(@daycount as varchar), 1) = 9 then 'j'
                 end
END

--===== Conditionaly drop the test table
     IF OBJECT_ID('TempDB..#Sales','U') IS NOT NULL
        DROP TABLE #Sales

--===== Populate the table with a million rows of data similar to yours.
     -- This ISNULL is to make the resulting DayCount column NOT NULL so
     -- we can put a primary key on it later.
 SELECT TOP 1000000
        ISNULL(CAST(ROW_NUMBER() OVER (ORDER BY sc1.ID) - 1 AS INT),0) AS DayCount,
        CAST(ROW_NUMBER() OVER (ORDER BY sc1.ID) *15 AS MONEY) AS Sales,
        CHAR(CAST(ROW_NUMBER() OVER (ORDER BY sc1.ID) - 1 AS INT)%10+ASCII('a')) AS Channel
   INTO dbo.#Sales
   FROM Master.sys.SysColumns sc1
  CROSS JOIN Master.sys.SysColumns sc2

--===== Add the primary key
     -- I don't name these on temp tables because they must be unique.
  ALTER TABLE dbo.#Sales
    ADD PRIMARY KEY CLUSTERED (DayCount)

CREATE TABLE #WACTran(
	[TranOrder]		INT PRIMARY KEY CLUSTERED,
	[TranType]		VARCHAR(3) NULL,
	[Qty]			INT NULL,
	[UnitCost]		DECIMAL(14, 4) NULL,
	[ExtendedCost]	DECIMAL(14, 4) NULL,
	[QtyOnHand]		INT
) 




INSERT INTO [#WACTran](TranOrder, TranType, Qty, UnitCost, ExtendedCost)
VALUES
 (0	,'BB',100	,1.5000,	150.0000 )
,(1	,'S',-50	,0.0000,	0.0000	 )
,(2	,'RCT',15	,0.0000,	0.0000	 )
,(3	,'S',-5		,0.0000,	0.0000	 )
,(4	,'VC',15	,1.6000,	0.0000	 )
,(5	,'S',-5		,0.0000,	0.0000	 )
,(6	,'TO',-4	,0.0000,	0.0000	 )
,(7	,'TI',2		,0.0000,	0.0000	 )
,(8	,'VTI',2	,1.6500,	0.0000	 )
,(9	,'RCT',10	,0.0000,	0.0000	 )
,(10,'S',-5		,0.0000,	0.0000	 )
,(11,'VC',10	,1.7500,	0.0000	 )
,(12,'S',-5		,0.0000,	0.0000	 )
,(13,'TO',-4	,0.0000,	0.0000	 )
,(14,'TI',2		,0.0000,	0.0000	 );



--===== Declare some obviously named variables
DECLARE @PrevTranOrder		INT,
        @PrevQtyOnHand		INT,
		@PrevUnitCost		DECIMAL(14,4),
		@PrevExtendedCost	DECIMAL(14,4)
--===== Do the "quirky" update using a very high speed pseudo-cursor,
     -- This is very similar to what you would do in a language like "C" except the
     -- "Read a row/Write a row" is built into the update.
 UPDATE #WACTran
    SET @PrevQtyOnHand = QtyOnHand = CASE 
										WHEN TranType = 'BB'
										THEN Qty
										WHEN TranType IN ('VTI','VC')
										THEN @PrevQtyOnHand
										ELSE @PrevQtyOnHand + Qty
									END,
		@PrevUnitCost = UnitCost = CASE
										WHEN TranType = 'BB'
										THEN UnitCost
										WHEN TranType IN ('VTI','VC')
										THEN (((@PrevQtyOnHand - Qty)*@PrevUnitCost)+(Qty*UnitCost))/@PrevQtyOnHand
										ELSE @PrevUnitCost
									END,
		@PrevExtendedCost = ExtendedCost = CASE
										WHEN TranType = 'BB'
										THEN ExtendedCost
										ELSE @PrevUnitCost*@PrevQtyOnHand
									END,
								@PrevTranOrder   = TranOrder --Just an "anchor", but gotta have it to guarantee things.
						   FROM [#WACTran] WITH (INDEX(0), TABLOCKX)

--===== Display the results
 SELECT *
   FROM [#WACTran]
  ORDER BY TranOrder

DROP TABLE #WACTran;