Question

A company made the following purchases during the year:

Jan. 10	15	units at	$360 each
Mar. 15	25	units at	$390 each
Apr. 25	10	units at	$420 each
July 30	20	units at	$450 each
Oct. 10	15	units at	$480 each

On December 31, there were 28 units in ending inventory. These 28 units consisted of 1 from the January 10 purchase, 2 from the March 15 purchase, 5 from the April 25 purchase, 15 from the July 30 purchase, and 5 from the October 10 purchase. Using specific identification, what would be the cost of the ending inventory, what is the number of units in the ending inventory, what is the COGS. What is the Gross Profit? The selling price for the units sold is $550.

Answer 1

Cost of ending inventory = (1 unit * 360 each) + (2 units * 390 each) + (5 units * 420 each) + (15 units * 450 each) + (5 units * 480 each)

= 360 + 780 + 2,100 + 6,750 + 2,400

= 12,390

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Number of units in ending inventory = 28 (1+2+5+15+5)

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Cost of goods sold = (14 units * 360 each) + (23 units * 390 each) + (5 units * 420 each) + (5 units * 450 each) + (10 units * 480 each)

= 5,040 + 8,970 + 2,100 + 2,250 + 4,800

= 23,160

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Units sold = (15+25+10+20+15) - 28 = 57

Sales = 57 units * 550 each = 31,350

Gross profit = Sales - Cost of goods sold

= 31,350 - 23,160

= 8,190