Kirtland Corporation uses a periodic inventory system. At the end of the annual

Question

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

Explanation / Answer

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

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