Question

The following information applies to the questions displayed below. Alexandra's Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Date Transactions Units Unit Cost Total Cost October 1 Beginning inventory 6 $ 820 $ 4,920 October 4 Sale 4 October 10 Purchase 5 830 4,150 October 13 Sale 3 October 20 Purchase 4 840 3,360 October 28 Sale 7 October 30 Purchase 8 850 6,800 $ 19,230 Required: 1. Calculate ending inventory and cost of goods sold at October 31, using the specific identification method. The October 4 sale consists of purses from beginning inventory, the October 13 sale consists of one purse from beginning inventory and two purses from the October 10 purchase, and the October 28 sale consists of three purses from the October 10 purchase and four purses from the October 20 purchase. Using FIFO, calculate ending inventory and cost of goods sold at October 31. Using LIFO, calculate ending inventory and cost of goods sold at October 31. Using weighted-average cost, calculate ending inventory and cost of goods sold at October 31. Note: Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.

Answer 1

The student's question involves calculating the ending inventory and cost of goods sold for Alexandra's Boutique using different inventory valuation methods. The methods include specific identification, FIFO, LIFO, and weighted-average cost. Accurate calculations involve accounting for purchases, sales, and the cost associated with each product accordingly.

Step-by-step explanation:

Calculating Inventory and Cost of Goods Sold

The student's question revolves around calculating the ending inventory and costs of goods sold (COGS) for Alexandra's Boutique using different inventory valuation methods for its Gucci purse transactions in October. We will use the specific identification method, FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and the weighted-average cost method.

Specific Identification Method: This method tracks the actual cost of each specific item. Based on the sales information provided, we will identify which units were sold and calculate the ending inventory and the cost of goods sold accordingly.

FIFO Method: In this approach, the oldest inventory items (by purchase date) are assumed to be sold first. Thus, costs of the earliest units are used to calculate COGS.

LIFO Method: Here, the most recently purchased items are presumed to be sold first. The costs of the latest units are used for COGS calculation.

Weighted-Average Cost Method: Costs for all inventory items are averaged, and this average cost is applied to both ending inventory and the cost of goods sold calculations.

To accurately perform these calculations, we need to sum the total units sold and then subtract them from the starting inventory plus the purchases throughout the month to find the ending inventory. Similarly, for the COGS, we need to multiply the number of units sold by their respective cost based on the valuation approach selected.