Accounting for Inventory - Specific Identification Method - Example

The video tutorial explains the specific identification method for inventory costs using Delta Company as an example. It covers the calculation of cost of goods sold, gross profit, and ending inventory. The tutorial also demonstrates how to create journal entries for inventory purchases and sales, emphasizing the importance of knowing the origin and cost of each inventory batch.

What is the primary focus of the specific identification method in inventory management?

• To determine the overall profit margin

• To estimate the average cost of inventory

• To track the exact cost of each inventory item sold

• To calculate the total sales revenue

How many units were sold from the beginning inventory of Delta Company?

• 8 units

• 6 units

• 5 units

• 7 units

What was the cost per unit for the inventory purchased on April 15th?

• $32

• $25

• $30

• $27

Which journal entry is made when inventory is purchased?

• Debit Cash, Credit Inventory

• Debit Inventory, Credit Cash

• Debit Sales Revenue, Credit Inventory

• Debit Cost of Goods Sold, Credit Cash

How is the sales revenue calculated for Delta Company's inventory sale?

• Total inventory cost divided by number of units sold

• Number of units sold multiplied by selling price per unit

• Total sales revenue divided by cost of goods sold

• Number of units sold multiplied by cost per unit

What is the formula for calculating gross profit?

• Total Sales minus Total Expenses

• Sales Revenue minus Cost of Goods Sold

• Sales Revenue minus Ending Inventory

• Net Income minus Operating Expenses

What is the ending inventory value for Delta Company?

• $646

• $432

• $804

• $513