Hardaway Inc. Purchased Inventory As Follows: Using Specific Identification Method To Calculate Cost Of Goods Sold And Ending Inventory
Calculation of Cost of Goods Sold (Cost of Sales) And Ending Inventory Under Specific Identification Method (SIM) Cost Of Goods Sold (COGS) can be calculated as shown below: As 100 units sold out of 200 units of January 10 Purchases, i.e., the ending inventory consists of 100 units or 100 units remain unsold, so cos of sales from here is 100 units X $5.00 = $500 As 200 units sold out of 500 units of January 20 Purchases, while unit unsold are 300, so cost of sales is 200 units X $10.00 = $,2000 As 700 units sold out of 800 units of January 30 Purchases, which means 100 units still remain unsold, so COGS is 700 units X $15.00 = $10,500 By adding cost of goods sold incurred from these specific identified units, we get the following: COGS = $500 + $2,000 + $10,500 = $13,000 So, the first correct answer of this multiple choice question (mcq) is (a), i.e., cost of goods sold is $13,000 To calculate Ending Inventory (EI), we use the following formula as shown below: Ending Inventory = U...