City Bicycle City Bicycle , a cycling store has a beginning inventory of one bi-level touring bicycle 1, for which it paid $2,500.Suppose that during the period the store purchases bi-level touring bicycle 2 for $2,900 and bi-level touring bicycle 3 for $3,000, and that it sells one bicycle for $5,500.The three bicycles are physically identical; the store acquired them at different times as their acquisition costs changed, so only their costs differ.
Using the City Bicycle example, suppose the cycling store uses the specific identification system, and uses serial numbers or product bar codes to identify bi-level touring bicycle 2 as the unit sold.The cost of goods sold is _____, and the ending inventory is _____.

Question

Quizplus · Accepted Answer

Since the specific identification method is used, the cost of goods sold will be the cost of the bicycle that was sold, which is bi-level touring bicycle 2 that costs $2,900. The ending inventory will be the cost of the remaining bicycles, which are bi-level touring bicycles 1 and 3 and have a total cost of $5,500 ($2,500 + $3,000). Therefore, the answer is A) $2,900 for cost of goods sold and $5,500 for ending inventory.

City Bicycle City Bicycle , a Cycling Store Has a Beginning