Question

Eaton Electronics uses a periodic inventory system. On March 31, Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894). In April, the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634). In May, the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968). In June, Eaton sells two of these TVs (serial numbers 11534894 and 11542631). There were no additional purchases or sales during the remainder of the year. Use the information above to answer the following question. Eaton Electronics uses the specific identification method. What is its cost of goods sold

Answer 1

Answer:

The cost of goods sold is $2950

Explanation:

The specific identification method requires the cost of inventory to be calculated using the actual cost at which the inventory is bought and recorded.

The cost of goods sold will be the cost of tv's that are sold during June. One tv that was sold with serial no 11534894 belonged to the TVs having cost of $1500. The other that was sold belonged to the cost group of $1450 per TV (serial no 11542631).

Thus cost of goods sold will be = 1500 + 1450 = $2950