Home Depot, Inc. uses the specific identification method for inventory valuation. The following information is available for the year ending December 31, 2023:

• Beginning inventory: 100 units @ $30 each
• Purchases:
  • 200 units @ $32 each
  • 150 units @ $35 each

• Sales: 400 units @ $50 each (100 units from beginning inventory, 200 units from first purchase, 100 units from second purchase)

Required:

1. Calculate the cost of goods sold (COGS).
2. Determine the ending inventory value.
3. Prepare the journal entries for inventory purchases and sales.
4. Discuss the impact of the specific identification method on financial statements.