Assume the Beginning Inventory as of January 1 Consisted of 500

question 29

Essay

Assume the beginning inventory as of January 1 consisted of 500 units that were purchased for $8.25 each. During the month, three new purchases were made. The first purchase consisted of 700 units costing $8.50 each, the second purchase had 800 units costing $9.00 each, and the third purchase had 600 units costing $9.50 each. At the end of the month, ending inventory shows 700 units. Compute the cost of goods sold and the ending inventory for the company using each of the following methods. Also determine the gross margin if the total sales revenue is $43,000.
a.
Specific identification: Of the units sold, 300 were from the beginning inventory, 600 from the first purchase, 700 from the second purchase, and 300 from the third purchase.
b.
First-in, first-out (FIFO)
c.
Weighted-average (round the unit price)
d.
Last-in, first-out (LIFO)

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Definitions:

Cost of Goods Sold

Cost of goods sold (COGS) represents the direct costs attributable to the production of the goods sold by a company.

Periodic Inventory System

An inventory system that updates inventory balances at the end of a period, relying on physical counts to measure stock levels.

Detailed Records

Comprehensive, accurate documentation of transactions, activities, or events, maintained for reference and compliance.

Goods Held for Resale

Refers to items that a company has in its inventory that are purchased with the intention of being sold to customers rather than being used in the production process.