Question

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			$	850				$	5,100
October	4		Sale		4
October	10		Purchase		5				860					4,300
October	13		Sale		3
October	20		Purchase		4				870					3,480
October	28		Sale		7
October	30		Purchase		8				880					7,040
													$	19,920

 

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.

Answer 1

periodic inventory system :

It is system of inventory in which updates are made on a periodic basis. It is traditional accounting method for inventory accounting.

Under specific identification method,  each specific item in inventory is identified and assigns cost individually

 

Calculation of cost of goods available:

 

Date		Transactions	Units	Unit Cost	Total Cost
October	1	Beginning inventory	6	850	$ 5,100.00
October	10	Purchase	5	860	$ 4,300.00
October	20	Purchase	4	870	$ 3,480.00
October	30	Purchase	8	880	$ 7,040.00
		Cost of goods available for sale	23		$            19,920.00

 

Calculation of cost of goods sold

Specific identification method
October 4 sale	Units (a)	Cost per unit(b)	Total cost (a x b)
01-Oct	4	850	$              3,400
October 13 sale
01-Oct	1	850	$                  850
10-Oct	2	860	$              1,720
October 28 sale
10-Oct	3	860	$              2,580
20-Oct	4	870	$              3,480
Cost of goods sold	14		$            12,030
Cost of goods available for sale	23		$            19,920
Ending inventory	9		$              7,890

 

Final answer:

Cost of goods sold  = $12,030

Ending inventory    = $ 7,890

 

Cost of goods sold  = $12,030

Ending inventory    = $ 7,890