Eversoll Inc.uses the periodic inventory system. If the June 30th inventory included 45 units from the June 5th purchase and 45 units from the June 14th purchase, Eversoll's cost of goods sold for June under the specific identification method would be

Question

Eversoll Inc.uses the periodic inventory system.  If the June 30th inventory included 45 units from the June 5th purchase and 45 units from the June 14th purchase, Eversoll's cost of goods sold for June under the specific identification method would be

Quizplus · Accepted Answer

Under the specific identification method, the cost of goods sold is calculated using the actual cost of the units sold. In this case, 45 units were sold from the June 5th purchase and 45 units were sold from the June 14th purchase.

The cost of the 45 units from the June 5th purchase is calculated as follows: 
Cost of 45 units = 45 x $43 = $1,935

The cost of the 45 units from the June 14th purchase is calculated as follows: 
Cost of 45 units = 45 x $47 = $2,115

Therefore, the total cost of goods sold for June is: 
Total cost of goods sold = Cost of 45 units from June 5th purchase + Cost of 45 units from June 14th purchase 
Total cost of goods sold = $1,935 + $2,115 
Total cost of goods sold = $4,050

However, since only 45 units were sold from each purchase, the correct cost of goods sold for June would be $2,263.00 (45 units sold from June 5th purchase x $43 per unit + 45 units sold from June 14th purchase x $47 per unit).