The Owner resells certain training materials to help clients with ongoing education for Tooling industry employees. The Owner treats these materials, before sale, as Inventory. The Owner purchased 1,250 training packages for resale at an average cost of $20 for a total cost of $25,000. The Owner used this average of $20 to calculate the Cost of Goods Sold for the sale of 300 training packages or $6,000 before the inventory adjustment in Transaction 13.

Requirements:

1. Using the following information, how much would the Cost of Goods Sold change if the Owner used the First-in, First-out Method and the Specific Identification Method? The Owner sold 300 units purchased on September 1. Prepare both calculations. (4 marks)

Here are the inventory purchase details:

Inventory purchases	Units	Cost	Per unit
Jan 1	200	5000	25.00
Apr 1	150	4000	26.67
June 1	200	3000	15.00
Aug 1	150	4000	26.67
Sep 1	300	5000	16.67
Nov 1	150	2000	13.33
Dec 1	100	2000	20.00
AVERAGE	1250	25000	20.00

2. The physical inventory adjustment in Transaction 13 was for $133 dollars. So the inventory of $19,000 was adjusted up to $19,133. This appears to be an error since Purchases of $25,000 minus Cost of Goods Sold of $6,000 equals $19,000. What is the impact of such an error for the 2019 and 2020 financial statements? (4 marks)

3. Which accounting requirement could apply to inventory, particularly if some training materials could become outdated? (2 marks)

Bonus: As a Human Resource professional, which accounting principle do you feel is the most relevant to your field of work in managing people in an organization. (1 mark)