Transactions Related to Wilson Tennis Racket

Oct 13, 2025 by magicalceylontours.com 59 views

Introduction

Bobby's Tennis Shop is a renowned retailer of tennis equipment, specializing in the top-selling Wilson tennis racket. As a business, it is essential to maintain accurate records of inventory, sales, and expenses to ensure smooth operations and informed decision-making. In this article, we will delve into the transactions related to the Wilson tennis racket for the month of August, focusing on the periodic inventory system and the specific identification method.

Periodic Inventory System

A periodic inventory system is a method of tracking inventory where physical counts are taken at regular intervals, typically at the end of each accounting period. This system is commonly used by businesses that have a large number of inventory items or those that experience frequent stockouts or overstocking. In the case of Bobby's Tennis Shop, the periodic inventory system is used to manage the inventory of Wilson tennis rackets.

Transactions Related to Wilson Tennis Racket

The following transactions are related to the Wilson tennis racket for the month of August:

August 1: Bobby's Tennis Shop purchases 100 Wilson tennis rackets from the manufacturer at a cost of $50 each.
August 4: The shop sells 20 Wilson tennis rackets at a selling price of $80 each.
August 10: The shop receives a shipment of 50 new Wilson tennis rackets, which are added to the existing inventory.
August 15: The shop sells 15 Wilson tennis rackets at a selling price of $85 each.
August 20: The shop purchases 30 Wilson tennis rackets from a local supplier at a cost of $55 each.
August 25: The shop sells 25 Wilson tennis rackets at a selling price of $90 each.

Specific Identification Method

The specific identification method is a costing method used in the periodic inventory system where the cost of each item is identified and recorded separately. This method is used when the business can identify the specific item being sold or purchased. In the case of Bobby's Tennis Shop, the specific identification method is used to track the cost of each Wilson tennis racket.

Calculating Cost of Goods Sold

To calculate the cost of goods sold (COGS) using the specific identification method, we need to identify the cost of each item sold. The cost of each item is calculated by multiplying the number of items sold by the cost per item.

August 4: The shop sells 20 Wilson tennis rackets at a selling price of $80 each. The cost of each item is $50, so the total cost of goods sold is: 20 x $50 = $1,000
August 15: The shop sells 15 Wilson tennis rackets at a selling price of $85 each. The cost of each item is $50, so the total cost of goods sold is: 15 x $50 = $750
August 25: The shop sells 25 Wilson tennis rackets at a selling price of $90 each. The cost of each item is $50, so the total cost of goods sold is: 25 x $50 = $1,250

Calculating Ending Inventory

To calculate the ending inventory, we need to subtract the cost of goods sold from the total cost of goods available for sale.

August 1: The shop purchases 100 Wilson tennis rackets at a cost of $50 each, so the total cost of goods available for sale is: 100 x $50 = $5,000
August 10: The shop receives a shipment of 50 new Wilson tennis rackets, so the total cost of goods available for sale is: 50 x $50 = $2,500
August 20: The shop purchases 30 Wilson tennis rackets at a cost of $55 each, so the total cost of goods available for sale is: 30 x $55 = $1,650
August 25: The shop sells 25 Wilson tennis rackets, so the total cost of goods available for sale is: $5,000 - $1,250 = $3,750

Conclusion

In conclusion, the periodic inventory system and the specific identification method are essential tools for businesses like Bobby's Tennis Shop to manage their inventory effectively. By tracking the cost of each item and calculating the cost of goods sold and ending inventory, businesses can make informed decisions about their operations and improve their bottom line.

Recommendations

Based on the transactions related to the Wilson tennis racket for the month of August, the following recommendations are made:

Improve inventory management: Bobby's Tennis Shop should consider implementing a just-in-time inventory system to reduce stockouts and overstocking.
Monitor sales trends: The shop should monitor sales trends to identify opportunities to increase sales and reduce costs.
Optimize pricing: The shop should consider adjusting its pricing strategy to reflect changes in market conditions and customer demand.

Introduction

In our previous article, we explored the transactions related to the Wilson tennis racket for the month of August at Bobby's Tennis Shop, a renowned retailer of tennis equipment. We also discussed the periodic inventory system and the specific identification method used by the shop to manage its inventory. In this article, we will answer some frequently asked questions (FAQs) related to the periodic inventory system and the specific identification method.

Q&A

Q: What is the periodic inventory system?

A: The periodic inventory system is a method of tracking inventory where physical counts are taken at regular intervals, typically at the end of each accounting period. This system is commonly used by businesses that have a large number of inventory items or those that experience frequent stockouts or overstocking.

Q: What is the specific identification method?

A: The specific identification method is a costing method used in the periodic inventory system where the cost of each item is identified and recorded separately. This method is used when the business can identify the specific item being sold or purchased.

Q: How does the periodic inventory system differ from the perpetual inventory system?

A: The periodic inventory system differs from the perpetual inventory system in that it only takes physical counts at the end of each accounting period, whereas the perpetual inventory system takes continuous physical counts throughout the period.

Q: What are the advantages of the periodic inventory system?

A: The advantages of the periodic inventory system include:

Reduced labor costs associated with taking continuous physical counts
Simplified inventory management
Reduced risk of inventory errors

Q: What are the disadvantages of the periodic inventory system?

A: The disadvantages of the periodic inventory system include:

Inaccurate inventory records due to physical counts being taken at the end of each period
Difficulty in tracking inventory levels in real-time
Increased risk of stockouts or overstocking

Q: How does the specific identification method differ from the first-in, first-out (FIFO) method?

A: The specific identification method differs from the FIFO method in that it identifies the specific item being sold or purchased, whereas the FIFO method assumes that the oldest item in inventory is sold first.

Q: What are the advantages of the specific identification method?

A: The advantages of the specific identification method include:

Accurate tracking of inventory costs
Ability to identify specific items being sold or purchased
Simplified inventory management

Q: What are the disadvantages of the specific identification method?

A: The disadvantages of the specific identification method include:

Increased labor costs associated with identifying specific items
Difficulty in tracking inventory levels in real-time
Increased risk of inventory errors

Q: How does the periodic inventory system and the specific identification method apply to Bobby's Tennis Shop?

A: The periodic inventory system and the specific identification method are used by Bobby's Tennis Shop to manage its inventory of Wilson tennis rackets. The shop takes physical counts at the end of each accounting period and identifies the specific item being sold or purchased using the specific identification method.

Q: What are the benefits of using the periodic inventory system and the specific identification method at Bobby's Tennis Shop?

A: The benefits of using the periodic inventory system and the specific identification method at Bobby's Tennis Shop include:

Accurate tracking of inventory costs
Ability to identify specific items being sold or purchased
Simplified inventory management
Reduced risk of stockouts or overstocking

Conclusion

In conclusion, the periodic inventory system and the specific identification method are essential tools for businesses like Bobby's Tennis Shop to manage their inventory effectively. By understanding the advantages and disadvantages of these methods, businesses can make informed decisions about their operations and improve their bottom line.

Recommendations

Based on the FAQs related to the periodic inventory system and the specific identification method, the following recommendations are made:

Improve inventory management: Businesses should consider implementing a just-in-time inventory system to reduce stockouts and overstocking.
Monitor sales trends: Businesses should monitor sales trends to identify opportunities to increase sales and reduce costs.
Optimize pricing: Businesses should consider adjusting their pricing strategy to reflect changes in market conditions and customer demand.

By implementing these recommendations, businesses can improve their inventory management, reduce costs, and increase sales, ultimately leading to improved profitability and competitiveness in the market.