Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a perpetual inventory system. Also, on December 15, Monson sells 15 units for $25 each.Purchases on December 7 10 units @ $11.00 costPurchases on December 14 20 units @ $17.00 costPurchases on December 21 15 units @ $19.00 costQS 5-14 (Algo) Perpetual: Inventory costing with specific identification LO P1Of the units sold, 8 are from the December 7 purchase and 7 are from the December 14 purchase. Determine the costs assigned to ending inventory when costs are assigned based on specific identification.
Question
Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a perpetual inventory system. Also, on December 15, Monson sells 15 units for 11.00 costPurchases on December 14 20 units @ 19.00 costQS 5-14 (Algo) Perpetual: Inventory costing with specific identification LO P1Of the units sold, 8 are from the December 7 purchase and 7 are from the December 14 purchase. Determine the costs assigned to ending inventory when costs are assigned based on specific identification.
Solution 1
To determine the costs assigned to ending inventory when costs are assigned based on specific identification, we need to follow these steps:
-
Identify the number of units sold from each purchase: According to the question, 8 units were sold from the December 7 purchase and 7 units were sold from the December 14 purchase.
-
Calculate the cost of goods sold (COGS): Multiply the number of units sold by the cost per unit for each purchase. For the December 7 purchase, this would be 8 units * 88.00. For the December 14 purchase, this would be 7 units * 119.00. Add these two amounts together to get the total COGS: 119.00 = $207.00.
-
Determine the number of units remaining in inventory: Subtract the number of units sold from the total number of units purchased. The total number of units purchased is 10 units (December 7) + 20 units (December 14) + 15 units (December 21) = 45 units. The total number of units sold is 8 units (December 7) + 7 units (December 14) = 15 units. So, the number of units remaining in inventory is 45 units - 15 units = 30 units.
-
Calculate the cost of ending inventory: Multiply the number of units remaining from each purchase by the cost per unit. For the December 7 purchase, this would be 2 units * 22.00. For the December 14 purchase, this would be 13 units * 221.00. For the December 21 purchase, this would be 15 units * 285.00. Add these three amounts together to get the total cost of ending inventory: 221.00 + 528.00.
So, the costs assigned to ending inventory when costs are assigned based on specific identification is $528.00.
Solution 2
To determine the costs assigned to ending inventory when costs are assigned based on specific identification, we need to follow these steps:
-
Identify the number of units sold from each purchase: According to the question, 8 units were sold from the December 7 purchase and 7 units were sold from the December 14 purchase.
-
Calculate the
Similar Questions
Phillips Supply uses a periodic inventory system but needs to determine the approximate amount of inventory at the end of each month without taking a physical inventory. Phillips has provided the following inventory data: Cost Price Retail Selling PriceInventory of merchandise, June 30 $ 304,000 $ 509,000Purchases during July 222,000 393,000Goods available for sale during July $ 526,000 $ 902,000Net sales during July $ 370,000Required:a. Estimate the cost of goods sold and the cost of the July 31 ending inventory using the retail method of evaluation.
A company's inventory records indicate the following data for the month of January: Date Activities Units Acquired at Cost Units Sold at RetailJanuary 1 Beginning inventory 530 units @ $18 = $9,540 January 8 Purchase 510 units @ $20 = $10,200 January 12 Sale 940 units @ $70January 17 Purchase 570 units @ $22 = $12,540 January 23 Sale 385 units @ $70January 28 Purchase 630 units @ $24 = $15,120 If the company uses the LIFO perpetual inventory system, what would be the cost of the ending inventory?Multiple Choice$8,470.$20,990.$19,790.$25,300.$26,410.
Earle sold inventory on credit for $400. The goods were estimated to have a cost of $150. Under the perpetual inventory method, the sale of goods would be recorded as follows: a. Dr Accounts receivable 400; Cr Sales revenue 400 Dr COGS 150; Cr Inventory 150 b. Dr Accounts receivable 400; Sales revenue 400 c. Dr Accounts receivable 400; Cr Sales revenue 400 Dr COGS 250; Cr Inventory 250 d. Dr Accounts receivable 400; Cr Sales revenue 400 Dr Inventory 150; Cr COGS 150
Grays Company has the following purchases and sales during the month of August. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? Date Activities Units Acquired at Cost Units Sold at RetailAugust 1 Beginning inventory 10 units @ $44 = $440 August 3 Purchase 20 units @ $46 = $920 August 6 Sales 12 units soldMultiple Choice$502.$504.$532.$548.$460.
A company's inventory records report the following: Date Activities Units Acquired at Cost Units Sold at RetailAugust 1 Beginning inventory 15 units @ $38 = $570 August 5 Purchase 10 units @ $39 = $390 August 12 Purchase 20 units @ $40 = $800 August 15 Sales 30 units soldUsing the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?Multiple Choice$400$290$600$1,160$1,760
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.