Question

If a business using the specific identification method of inventory has two items on hand at $300 each and purchases four items at $400 each, what is the value of inventory if two of the $300 items are sold

Answer 1

Answer:

The value of inventory is $1600.

Explanation:

The business has two inventory on hand that cost $300 each so total value of inventory = 2 × 300 = $600

The value of four items at $400 each = 4 × 400 = $1600

Total number of items = 2 + 4 = 6

Total value of 6 items = 600 + 1600 = $2200

The value of sold inventory = 2 × 300 = $600

The value of inventory = total value of inventory - The value of sold inventory

The value of inventory = $2200 - $600

The value of inventory = $1600