Question

Delta Diamonds uses a periodic inventory system. The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $800, two were purchased on July 9 for $900 each, and two were purchased on September 23 for $950 each. On December 24, it sold one of the diamonds that was purchased on July 9. Using the specific identification method, its ending inventory (after the December 24 sale) equals:

Answer 1

Answer: $2650

Explanation:

Using the specific identification method, its ending inventory (after the December 24 sale) will be:

Units for sale = 5 units

Units sold = 1

It should be noted that the unit that was sold was the one that was bought on July 9th.

Ending units will now be:

= $800 + ($2 × $900) + $950 - $900

= $800 + $1800 + $950 - $900

= $3550 - $900

= $2650