Question

Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the time of each sale, as if it uses a perpetual 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			1,400		$	50
Transactions during the year:
a.	Purchase, January 30		2,100			62
b.	Sale, March 14 ($100 each)		(1,370	)
c.	Purchase, May 1		1,120			80
d.	Sale, August 31 ($100 each)		(1,500	)

1. Calculate the cost of goods sold and ending inventory for Gladstone Company assuming it applies the LIFO cost method perpetually at the time of each sale.

Answer 1

Calculate cost of goods sold and ending inventory under LIFO

	Purchase			Cost of goods sold			Ending inventory
Date	Unit	Unit Cost	Total Cost	Unit	Unit cost	Total Cost	Unit	Unit cost	Total Cost
Jan 1							1400	50	70000
Jan 30	2100	62	130200				1400 2100	50 62	70000 130200
Mar 14				1370	62	84940	1400 730	50 62	70000 45260
May 1	1120	80	89600				1400 730 1120	50 62 80	70000 45260 89600
Aug 31				1120 380	80 62	89600 23560	1400 350	50 62	70000 21700
Dec 31						198100			91700

Cost of goods sold = $198100

Ending inventory = 91700