Question
In: Accounting
Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December...
Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December 31, the accounting records for the most popular item in inventory showed the following:
Transactions Units Unit
Cost Beginning inventory, January 1 350 $6.00 Transactions during the year:
a. Purchase, January 30 250 $ 2.90
b. Purchase, May 1 410 $7.00
c. Sale ($8 each) (110)
d. Sale ($8 each) (650)
Required: a. Compute the amount of goods available for sale. b. & c. Compute the amount of ending inventory and cost of goods sold at December 31 Specific identification inventory costing methods.
For Specific identification, assume that the first sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the second sale was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1. (Do not round intermediate calculations. Round "Average Cost and Specific Identification" answers to 2 decimal places.
I need help computing the Specific Identification, please show
all details as previous examples are confusing - Thanks
Solutions
Expert Solution
| Units | Unit cost | Total | |||||
| 1-Jan | 350 | 6 | 2100 | ||||
| 20-Jan | 250 | 2.9 | 725 | ||||
| 1-May | 410 | 7 | 2870 | ||||
| Total | 1010 | 5695 | |||||
| Amount of goods available for sale = $5695 | |||||||
| First sale: | |||||||
| From beginning inventory = 110/5*2= 44 | |||||||
| From purchase of January 30 = 110/5*3 = 66 | |||||||
| Cost of goods sold from first sale = (44*6)+(66*2.9)= $455.4 | |||||||
| Second sale: | |||||||
| Remainder of the beginning inventory = 350-44=306 | |||||||
| Sales from purchase of May 1 = 650-306= 344 | |||||||
| Cost of goods sold from second sale = (306*6)+(344*7)= $4244 | |||||||
| Cost of goods sold at December 31 Specific identification inventory: | |||||||
| First sale | 455.4 | ||||||
| Second sale | 4244 | ||||||
| Total cost of goods sold | 4699.4 | ||||||
| Ending inventory can be computed by formula method: | |||||||
| Ending inventory = Cost of goods available for sale-Cost of goods sold = 5695-4699.4= $995.6 | |||||||
| Ending inventory can be also computed manually: | |||||||
| Units remaining from Purchase, January 30 = 250-66=184 | |||||||
| Units remaining from Purchase, May 1 = 410-344= 66 | |||||||
| Ending inventory = (184*2.9)+(66*7)= $995.6 | |||||||
ekkarill92 answered 1 year agoRelated Solutions
Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December...
Kirtland Corporation uses a periodic inventory system. At the
end of the annual accounting period, December 31, the accounting
records for the most popular item in inventory showed the
following:
Transactions
Units
Unit Cost
Beginning inventory, January 1
370
$4.00
Transactions during the year:
a.
Purchase, January 30
270
3.10
b.
Purchase, May 1
430
5.00
c.
Sale ($6 each)
(130)
d.
Sale ($6 each)
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Required:
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Kirtland Corporation uses a periodic inventory system. At the end of the annual accounting period, December...
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following:
Transactions
Units
Unit Cost
Beginning inventory,
January 1
310
$6.00
Transactions during
the year:
a.
Purchase, January 30
210
2.50
b.
Purchase, May 1
370
7.00
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