Gladstone Company tracks the number of units purchased and sold throughout each
ID: 2540463 • Letter: G
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 2,200 $55 Beginning inventory, January1 Transactions during the year: a. Purchase, January 30 b. Sale, March 14 ($100 each) c. Purchase, May 1 d. Sale, August 31 ($100 each) 3,350 (1,850) 2,050 (2,300) 65 85Explanation / Answer
1-
units
price
total
1-Jan
beginning inventory
2200
55
121000
30-Jan
purchase
3350
65
217750
1-May
purchase
2050
85
174250
Units available during the year for sales
7600
513000
weighted average cost
total value of inventory/no of units in inventory
513000/7600
67.5
14-Mar
Units sold
1850
31-Aug
Units sold
2300
units sold during the Year
4150
Units in inventory
7600-4150
3450
Amount of goods available for sale
value of ending inventory
cost of goods sold
LIFO
513000
(1250*65)+(2200*55)
202250
513000-202250
310750
Weighted average cost
513000
(4150*67.5)
280125
513000-280125
232875
FIFO
513000
(1950*65)+(2050*85)
301000
513000-301000
212000
Specific identification
513000
248450
513000-248450
264550
sale of march 14
from beginning inventory
1850*2/5
740
from beginning inventory
from the purchase of january 30
1850*3/5
1110
from the purchase of january 30
march sale in units
1850
balance in beginning inventory after sale
balance in beginning inventory
2200-740
1460
balance in purchase of january 30 after sale
balance in purchase of january
3350-1110
2240
total units in inventory after mar 14 sale
3700
sale august 31
Units from beginning inventory
from beginning inventory
1460
Units from the purchase of august
from purchase of may 1
840
total units sold august 31
august 31 sale
2300
balance in january 31 purchase
2240
2240
65
145600
balance in may 1 purchase
2050-840
1210
85
102850
value of year end inventory
3450
248450
2-
Highest gross profit in case of FIFO as cost of goods sold in minimum
3-
Lifo will results in lowest income tax as its cost of goods sold is higher which means low profit before tax and low tax expense
1-
units
price
total
1-Jan
beginning inventory
2200
55
121000
30-Jan
purchase
3350
65
217750
1-May
purchase
2050
85
174250
Units available during the year for sales
7600
513000
weighted average cost
total value of inventory/no of units in inventory
513000/7600
67.5
14-Mar
Units sold
1850
31-Aug
Units sold
2300
units sold during the Year
4150
Units in inventory
7600-4150
3450
Amount of goods available for sale
value of ending inventory
cost of goods sold
LIFO
513000
(1250*65)+(2200*55)
202250
513000-202250
310750
Weighted average cost
513000
(4150*67.5)
280125
513000-280125
232875
FIFO
513000
(1950*65)+(2050*85)
301000
513000-301000
212000
Specific identification
513000
248450
513000-248450
264550
sale of march 14
from beginning inventory
1850*2/5
740
from beginning inventory
from the purchase of january 30
1850*3/5
1110
from the purchase of january 30
march sale in units
1850
balance in beginning inventory after sale
balance in beginning inventory
2200-740
1460
balance in purchase of january 30 after sale
balance in purchase of january
3350-1110
2240
total units in inventory after mar 14 sale
3700
sale august 31
Units from beginning inventory
from beginning inventory
1460
Units from the purchase of august
from purchase of may 1
840
total units sold august 31
august 31 sale
2300
balance in january 31 purchase
2240
2240
65
145600
balance in may 1 purchase
2050-840
1210
85
102850
value of year end inventory
3450
248450
2-
Highest gross profit in case of FIFO as cost of goods sold in minimum
3-
Lifo will results in lowest income tax as its cost of goods sold is higher which means low profit before tax and low tax expense
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.