Question

Gladstone Limited 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 $ 5.00 Beginning inventory, January 1 Transactions during the year: Purchase, January 30 Sale, March 14 ($10 each Purchase, May 1 Sale, August 31 ($10 each) 1,800 2,500 (1,450) 1,200 6.20 a. b. 8.00 C. d. (1,900) 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. For Specific identification, assuming that 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. (Do not round Weighted average cost per unit. Round your final answers to the nearest dollar amount.) Goods Ending inventory Cost of goods sold available for sale a. Weighted average cost. b. First-in, first-out c. Specific identification.

Answer 1

goods available for sale a b C weighted avg inventory first in first out specific identification 34100 34100 34100 ending inventory 13330 15490 14266 cost of goods sold 20770 18610 19834 L L 2a) first in, first out 2b) weighted average cost lower cost of goods sold results in higher gross profit higher cost of goods sold results in lower profits and lower income taxes

weighted avg inventory cost of goods sold units unit price 3350 6.20 total 20770 ending inventory units unit price total 2150 6.20 13330 beginning inventory jan1 purchase jan 30 purchase may 1 total cost of goods available for sale units unit price total 1800 5.00 9000 2500 6.20 15500 1200 8.00 9600 5500 34100 weighted avg cost per uni= 34100/5500=6.20 20770 2150 13330 3350 FIFO periodic inventory ending inventory units unit price total cost of goods available for sale units unit price total 1800 5.00 9000 2500 16.20 15500 1200 8.00 9600 5500 34100 cost of goods sold units unit price 1800 5.00 1550 6.20 total 9000 9610 beginning inventory jan1 purchase jan 30 purchase may 1 total 950 1200 2150 6.20 8.00 5890 9600 15490 3350 18610 specific identification ending inventory units unit price total beginning inventory jan1 purchase jan 30 purchase may 1 cost of goods available for sale units unit price total 1800 5.00 9000 2500 6.20 15500 1200 8.00 9600 cost of goods sold units unit price 580 5.00 870 6.20 1220 5.00 680 8.00 3350 1630 6.20 10106 total 2900 5394 6100 5440 19834 8.00 520 2150 4160 14266 total 5500 34100