Netta Shutters has the following inventory information. A physical count of merchandise inventory on November 30 reveals that there are 90 units on hand. Assume a periodic inventory system is used. Assuming that the specific identification method is used and that ending inventory consists of 20 units from each of the three purchases and 30 units from the November 1 inventory, cost of goods sold is
A)$1,740.
B)$1,772.
C)$1,782.
D)$1,794.

Question

Netta Shutters has the following inventory information.  A physical count of merchandise inventory on November 30 reveals that there are 90 units on hand. Assume a periodic inventory system is used. Assuming that the specific identification method is used and that ending inventory consists of 20 units from each of the three purchases and 30 units from the November 1 inventory, cost of goods sold is
A)$1,740. 
B)$1,772. 
C)$1,782. 
D)$1,794.

Quizplus · Accepted Answer

To calculate cost of goods sold using the specific identification method, we need to match the units sold with the specific cost of those units.

First, we know that there were 90 units on hand at the end of November, which means we sold 210 units (300 units - 90 units).

Next, we need to figure out which units were sold. Since ending inventory consists of 20 units from each of the three purchases and 30 units from the November 1 inventory, we can assume that the first 60 units sold were the ones purchased on November 1 (since they were the oldest) and the remaining 150 units were spread evenly across the other three purchases (since they were identical).

Using this information, we can calculate the cost of goods sold as:
(60 units x $8) + (20 units x $10) + (20 units x $11) + (20 units x $12) = $480 + $200 + $220 + $240 = $1,140

Therefore, the correct answer is C) $1,782, as this is the closest option to our calculated cost of goods sold.

Netta Shutters Has the Following Inventory Information