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			1,800		$	50
Transactions during the year:
a.	Purchase, January 30		2,500			62
b.	Sale, March 14 ($100 each)		(1,450	)
c.	Purchase, May 1		1,200			80
d.	Sale, August 31 ($100 each)		(1,900	)

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:

Answer 1

Correct Answer:

Goods available for sale: $    341,000.00

Cost of goods sold: $ 198,340.00

Ending inventory: $ 142,660.00

Working:

Specific Identifications
Date	Goods Available for sale			Cost of Goods Sold			Ending Inventory Balance
	# of Units	Cost Per Unit	Cost of Goods Available for sale	# of Units Sold	Cost per Unit	Cost of Goods Sold	# of Units	Cost per Unit	Inventory Balance
Beginning Inventory	1800	$          50.00	$       90,000.00	1800	$               50.00	$    90,000.00	0	$        50.00	$                    -
Purchases
30-Jan	2500	$          62.00	$    155,000.00	870	$               62.00	$    53,940.00	1630	$        62.00	$ 101,060.00
01-May	1200	$          80.00	$       96,000.00	680	$               80.00	$    54,400.00	520	$        80.00	$    41,600.00
Totals	5500		$    341,000.00	3350		$ 198,340.00	2150		$ 142,660.00

End of answer.

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