Alphabet Company, which uses the periodic inventory method, purchases different

Question

Alphabet Company, which uses the periodic inventory method, purchases different letters for resale. Alphabet had no beginning inventory. It purchased A thru G in January at $5.50 per letter. In February, it purchased H thru L at $7.50 per letter. It purchased M thru R in March at $8.50 per letter. It sold A, D, E, H, J and N in October. There were no additional purchases or sales during the remainder of the year. 9.value:

If Alphabet Company uses the specific identification method, what is the cost of its ending inventory?

$98

$127

$87

$38

Explanation / Answer

Inventory from A to G = 7 * 5.5 = 38.5
Inventory from H to L = 7.5 * 5 = 37.5
Inventory from M to R = 8.5 * 6 = 51.0
Total initial inventory = 38.5 + 37.5 + 51 = 127

Sales of A, D, E, H, J and N = 3 * 5.5 + 7.5 * 2 + 8.5 = 40
Cost of ending inventory = 127 - 40 = 87

Best of Luck. God Bless

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