Question

# Required information Skip to question [The following information applies to the questions displayed below.] Sandra’s Purse...

Required information

[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 \$ 700 \$ 4,200 October 4 Sale 4 October 10 Purchase 5 710 3,550 October 13 Sale 3 October 20 Purchase 4 720 2,880 October 28 Sale 7 October 30 Purchase 8 730 5,840 \$ 16,470

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.

ending enventory?

cost of good sold?

Solution:

 Purchases Sales Date Particulars Quantity Rate Amount Quantity Rate Amount Closing quantity 1 Opening 6 700 \$4,200 6 4 Sales 4 700 \$2,800 2 10 Purchases 5 710 \$3,550 7 13 Sales 1 700 \$700 6 13 Sales 2 710 \$1,420 4 20 Purchases 4 720 \$2,880 8 28 Sales 3 710 \$2,130 5 28 Sales 4 720 \$2,880 1 30 Purchase 8 730 \$5,840 9 Total 23 \$16,470 14 \$9,930

Ending inventory =(1*700)+(8*730)

=\$700+\$5,840

=\$6,540

Cost of goods sold = Total purchase cost - Closing stock

=\$16,470 -\$6,540

=\$9,930

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