Question

In: Accounting

[The following information applies to the questions displayed below.] Sandra’s Purse Boutique has the following transactions...

[The following information applies to the questions displayed below.]

Sandra’s Purse Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Sandra's Purse Boutique uses a periodic inventory system.

Date Transactions Units Unit Cost Total Cost
October 1 Beginning inventory 6 $ 710 $ 4,260
October 4 Sale 4
October 10 Purchase 5 720 3,600
October 13 Sale 3
October 20 Purchase 4 730 2,920
October 28 Sale 7
October 30 Purchase 7 740 5,180
$ 15,960

Required:

1. Calculate ending inventory and cost of goods sold at October 31, using the specific identification method. The October 4 sale consists of purses from beginning inventory, the October 13 sale consists of one purse from beginning inventory and two purses from the October 10 purchase, and the October 28 sale consists of three purses from the October 10 purchase and four purses from the October 20 purchase.

What is ending inventory and cost of goods sold?

Solutions

Expert Solution

Solution

Ending inventory $    5,890.00
Cost of goods sold $ 10,070.00

Working

Units available Sold Ending Units Cost per unit Ending Inventory
Oct-01 6 5 1 $        710.00 $        710.00
Oct-10 5 5 0 $        720.00 $                  -  
Oct-20 4 4 0 $        730.00 $                  -  
Oct-30 7 7 $        740.00 $     5,180.00
Total $     5,890.00

Cost of goods sold= Goods available for sale - Ending inventory


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