Question

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			1,700		$	50
Transactions during the year:
a.	Purchase, January 30		3,200			63
b.	Sale, March 14 ($100 each)		(1,350	)
c.	Purchase, May 1		1,900			80
d.	Sale, August 31 ($100 each)		(1,800	)

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:

Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

Answer 1

Specific Identification :-

Specific Identification	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	1700	50	85000	1700	50	85000
Purchases:-
Jan 30	3200	63	201600	810	63	51030	2390	63	150570
May1	1900	80	152000	640	80	51200	1260	80	100800
Total	6800		438600	3150		187230	3650		251370

Average cost :-

Average cost	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale
Beginning Inventory	1700	50	85000	3150         64.50        203175			3650            64.50                235425
Purchases:-
Jan 30	3200	63	201600
May1	1900	80	152000
Total	6800		438600	3150		203175	3650		235425

Avg cost per unit = Total cost available for sale/No of units available for sale

     = 438600/6800= 64.5

Periodic FIFO :-

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic FIFO			Ending Inventory-Periodic FIFO
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic FIFO	# of units	Cost pu	Ending Inventory-Periodic FIFO
Beginning Inventory	1700	50	85000	1700	50	85000
Purchases:-
Jan 30	3200	63	201600	1450	63	91350	1750	63	110250
May1	1900	80	152000				1900	80	152000
Total	6800		438600	3150		176350	3650		262250

Periodic LIFO :-

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic LIFO			Ending Inventory-Periodic LIFO
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic LIFO	# of units	Cost pu	Ending Inventory-Periodic LIFO
Beginning Inventory	1700	50	85000				1700	50	85000
Purchases:-
Jan 30	3200	63	201600	1250	63	78750	1950	63	122850
May1	1900	80	152000	1900	80	152000
Total	6800		438600	3150		230750	3650		207850