16. the cost and inventory

Required information Costs are assigned to the Cost of Goods Sold account each time a sale occurs in a perpetual system. Specific identification assigns a cost to each item sold by referring to its actual cost (for example, its net invoice cost). Weighted average assigns a cost to items sold by dividing the current balance in the Inventory account by the total items available for sale to determine cost per unit. We then multiply the number of units sold by this cost per unit to get the cost of each sale. FIFO assigns cost to items sold assuming that the earliest units purchased are the first units sold. LIFO assigns cost to items sold assuming that the most recent units purchased are the first units sold. Knowledge Check 01 Intercontinental, Inc., uses a perpetual inventory system. Consider the following information about its inventory: July 1. purchased 10 units for $910 or $91 per unit: July 3, purchased 15 units for $1,590 or $106 per unit: July 14, sold 20 units: July 17. purchased 20 units for $2,300 or $115 per unit: July 28, purchased 10 units for $1,190 or $119 per unit: July 31. sold 23 units. Using FIFO, the cost of goods sold for the sale of 23 units on July 31 is and the inventory balance at July 31 is Cost of goods sold Inventory balance