Wize University Introduction to Financial Accounting Textbook > Inventory
Specific Identification
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Specific Identification
Specific identification is used when the goods in inventory is expensive and not interchangeable, like jewelry, cars, and furniture.
Characteristics of Specific Identification
- Each unit in inventory is specifically coded.
- Only used with the perpetual inventory system.
- COGS is based on the specific units being sold.
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Example: Specific Identification
ABC Inc. began the year with 3 units of inventory and purchased inventory on three separate occasions during the first quarter of 2020, the details of those purchases is the following:
The following sales were made during Q1 of 2020:
- January 21st, sold a gold bracelet and a diamond necklace to Customer #23.
- February 17th, sold a diamond necklace and two pairs of diamond earrings to Customer #24.
- March 16th, sold a gold bracelet and gold watch to customer #25.
- Determine the cost of goods sold for each sale and the cost of ending inventory.
- Prepare the journal entry to record the sale to Customer #24. The customer paid a total $93,000 in cash.
Practice: Specific Identification
The manager of the downtown Buffalo, NY Ford dealership has requested your help in preparing its financial statements. You've been provided with this list of vehicles that the dealership had in inventory during the month of April 2020.
The following transactions took place:
- Sold 2 Ford Escapes and 3 Ford Mustangs to Hertz Car Rental Agency on April 11th.
- Sold 4 Ford F-150s and 1 Ford Explorer's to Bob's Builders Group on April 13th.
- Sold 3 Ford F-150s to the Buffalo Police Department on April 21st.
What is the correct amount that should be recorded as cost of goods sold for April?