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			3,200		$	45
Transactions during the year:
a.	Purchase, January 30		4,550			55
b.	Sale, March 14 ($100 each)		(2,850	)
c.	Purchase, May 1		3,250			75
d.	Sale, August 31 ($100 each)		(3,300	)

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:

1. 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.)

   	Amount of Goods Available for Sale	Ending Inventory	Cost of Goods Sold
   Last-in, first-out
   Weighted average cost
   First-in, first-out
   Specific identification

Answer 1

Answer:

1.

Cost of Goods Available
	[a]	[b]	[a]*[b]
Beginning Inventory	3,200	45	144,000
Purchase, Jan 30	4,550	55	250,250
Purchase, May 1	3,250	75	240,000
Cosrt of Goods Available	11,000		634,250

a.

Last-in First -Out:

Last-in First -Out
Ending Inventory	Units	Cost	Total
	[a]	[b]	[a]*[b]
Beginning Inventory	3,200	45	144,000
Purchase, Jan 30	4,550	55	250,250
Ending Inventory (1)	7,750	75	394,250
Cosrt of Goods Available (2)	11,000		634,250
Cosrt of Goods Sold (2)-(1)	3,250		240,000

b.

Weighted-Average Cost:

Weighted-Average Cost
Cosrt of Goods Available	11,000		634,250
Weighted-Average Cost
(634,250/11,000)	57.66
Ending Inventory	7,750	57.66	446,865
Cosrt of Goods Sold	3,250	57.66	187,395

c.

First-in First -Out:

First-in First -Out
Ending Inventory	Units	Cost	Total
	[a]	[b]	[a]*[b]
Purchase, May 1	3,250	75	240,000
Purchase, Jan 30	4,500	55	247,500
Ending Inventory (1)	7,750		487,500
Cosrt of Goods Available (2)	11,000		634,250
Cosrt of Goods Sold (2)-(1)	3,250		146,750

d.

Specific Identification:

Specific Identification Method
Cosrt of Goods Sold	Units	Cost	Total
March 14 Sale:	[a]	[b]	[a]*[b]
Beginning Inventory (2,850 *2/5)	1,140	45	51,300
Purchase, Jan 30 (2,850 *3/5)	1,710	55	94,050
	2,850		145,350
March 14 Sale:
Beginning Inventory (3,200-1,140)	2,060	45	92,700
Purchase, May 1 (3,300-2,060)	1,240	75	93,000
	3,300		185,700
Total Cost of Goods Sold (1)	3,250		331,050
Cosrt of Goods Available (2)	11,000		634,250
Ending Inventory (2)-(1)	7,750		303,200