Question

U-Save Automotive Group purchased 10 vehicles during the current month. Two trucks were purchased for $20,000 each, two SUVs were purchased for $31,000 each, and six hybrid cars were purchased for $27,000 each. A review of the sales invoices revealed that five of the hybrid cars were sold and both trucks were sold. What is the cost of U-Save's ending inventory if it uses the specific identification method?

Answer 1

Answer:

$89,000

Explanation:

When using the specific identification method for ending inventory, the amount of goods remaining are multiplied by their purchase cost at their purchase date. Therefore, if five hybrid cars were sold and both trucks were sold, final inventory consists of two SUVs ($31,000 each) and one hybrid car ($27,000):

$I = 2*31,000 + 1*27,000\\I = 89,000$

The cost of U-Save's ending inventory is $89,000