Question

Alphabet Company, which uses the periodic inventory method, purchases different letters for resale. Alphabet had no beginning inventory. It purchased A thru G in January at $7.50 per letter. In February, it purchased H thru L at $9.50 per letter. It purchased M thru R in March at $10.50 per letter. It sold A, D, E, H, J and N in October. There were no additional purchases or sales during the remainder of the year. If Alphabet Company uses the specific identification method, what is the cost of its ending inventory?

Answer 1

Answer:

$111

Explanation:

Purchases;

A-G 7*7.5               $52.5

H-L 5*9.5               $47.5

M-R 6*10.5             $63

Total Purchases    $163

Less;Sales

A,D,E 3*7.5             ($22.5)

H,J 2*9.5                 ($19)

N      1*10.5               ($10.5)

Total Sales               ($52)

Ending Inventory Cost =(purchases-sales)=$163-$52=$111