In December, Paul's Paintings purchased the following items:
Date Purchased Painting Cost
Dec. 12..............................1.....................$1,000
5.......................................2........................800
10.....................................3......................1,100
19.....................................4........................700
20.....................................5......................1,200
On December 22, paintings 1 and 5 were sold for $2,500 each.
Instructions
(a) Should Paul's Paintings use specific identification or one of the two cost formulas (FIFO or average) instead? Explain.
(b) Calculate ending inventory and cost of goods sold using specific identification.
(c) Prepare the journal entry to record the December 22 sale.