Consider the following facts: - Company A has the following inventory informatio

Question

Consider the following facts: - Company A has the following inventory information: - Inventory at the beginning of January was 15 units purchased at $8.00 each. - On January 8, purchased 60 units @ $8.30 each - On January 17, purchased 30 units @ $8.40 each - On January 25, purchased 45 units @ $8.80 each - On January 31, a physical count showed 45 units on hand - Company A uses the periodic inventory system - Company A uses the specific identification method. - The ending inventory includes 10 units from each of the purchases and 15 units from the beginning balance. Company A?s cost of goods sold is:

Explanation / Answer

Answer:

Company A's cost of goods sold = Cost of total inventory - cost of inventory in hand on January 31

Company A's cost of goods sold = {(15 x 8) + (60 x 8.30) + (30 x 8.40) + (45 x 8.80)} - {(10 x 8.3) + (10 x 8.40) + (10 x 8.80) + (15 x 8.00)} = $ 891

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