In: Accounting
PA7-1 Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory System [LO 7-3]
Gladstone Company tracks the number of units purchased and sold
throughout each accounting period but applies its inventory costing
method at the end of each period, as if it uses a periodic
inventory system. Assume its accounting records provided the
following information at the end of the annual accounting period,
December 31.
Transactions | Units | Unit Cost | |||||||
Beginning inventory, January 1 | 1,300 | $ | 40 | ||||||
Transactions during the year: | |||||||||
a. | Purchase, January 30 | 2,000 | 60 | ||||||
b. | Sale, March 14 ($100 each) | (950 | ) | ||||||
c. | Purchase, May 1 | 700 | 80 | ||||||
d. | Sale, August 31 ($100 each) | (1,500 | ) | ||||||
Assuming that for Specific identification method (item 1d) the
March 14 sale was selected two-fifths from the beginning inventory
and three-fifths from the purchase of January 30. Assume that the
sale of August 31 was selected from the remainder of the beginning
inventory, with the balance from the purchase of May 1.
Required:
multiple choice 1
Last-in, first-out
Weighted average cost
First-in, first-out
Specific identification
multiple choice 2
Last-in, first-out
Weighted average cost
First-in, first-out
Specific identification