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			2,300		$	60
Transactions during the year:
a.	Purchase, January 30		3,500			72
b.	Sale, March 14 ($100 each)		(1,950	)
c.	Purchase, May 1		2,200			90
d.	Sale, August 31 ($100 each)		(2,400	)

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.) LIFO,FIFO, WEIGHTED AVERAGE, and SPECIFIC IDENTIFICATION

Answer 1

i) Under LIFO & FIFO method:

					LIFO Method	FIFO Method
		Receipt	Issue	Balance	Issue	Balance
Date	Transaction	Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost
1-Jan	Opening Balance							2300	60	$ 138,000				2300	60	$ 138,000
30-Jan	Purchases	3500	72	$252,000				2300	60	$ 138,000				2300	60	$ 138,000
								3500	72	$ 252,000				3500	72	$ 252,000
14-Mar	Sale				1950	72	$140,400	2300	60	$ 138,000	1950	60	$117,000	350	60	$    21,000
								1550	72	$ 111,600				3500	72	$ 252,000
1-May	Purchases	2200	90	$198,000				2300	60	$ 138,000				350	60	$    21,000
								1550	72	$ 111,600				3500	72	$ 252,000
								2200	90	$ 198,000				2200	90	$ 198,000
31-Aug	Sale				2200	90	$198,000	2300	60	$ 138,000	350	60	$21,000	1450	72	$ 104,400
					200	72	$14,400	1350	72	$    97,200	2050	72	$147,600	2200	90	$ 198,000

Amount of goods available for sale = Balance after 31st aug sale = $138000+$97200 = $235,200

Ending inventory 2300units @ $60 & 1350 units @ $72

Cost of goods sold = ΣIssue cost = 140400+198000+14400 = $352,800

ii) Under FIFO method:

Amount of goods available for sale = Balance after 31st aug sale = $104400+$198000 = $302,400

Ending inventory 1450units @ $72 & 2200 units @ $90

Cost of goods sold = ΣIssue cost = 117000+21000+147600 = $285,600

iii) Weighted average method:

		Receipt	Issue	Balance
Date	Transaction	Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost
1-Jan	Opening Balance							2300	60	$ 138,000
30-Jan	Purchases	3500	72	$252,000				5800	$ 67.24	$ 390,000
14-Mar	Sale				1950	$67.24	$131,121	3850	$ 67.24	$ 258,879
1-May	Purchases	2200	90	$198,000				6050	$ 75.52	$ 456,879
31-Aug	Sale				2400	$75.52	$181,241	3650	$ 75.52	$ 275,638

Amount of goods available for sale = Balance after 31st aug sale = $275,638

Ending inventory 3650units @ $75.52

Cost of goods sold = ΣIssue cost = 131121+181241 = $312,362

iv) Specific identification method:

		Receipt	Issue	Balance
Date	Transaction	Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost
1-Jan	Opening Balance							2300	60	$ 138,000
30-Jan	Purchases	3500	72	$252,000				2300	jeff jeffy Next > < Previous Related Solutions Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies... 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... Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies... 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