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. Units 1,500 Unit Cost $ 40 Transactions Beginning inventory, January 1 Transactions during the year: a. Purchase, January 30 b. Sale, March 14 ($100 each) c. Purchase. May 1 d. Sale, August 31 ($100 each) 52 2,900 (1,150) 1.600 (1,600) 70 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 a. Last-in, first-out b. Weighted average cost c. First-in, first-out d. Specific identification $ $ $ | $ 322,800 322,800 322,800 322,800

Answer 1

Solution a:

Computation of COGS and ending inventory - Periodic LIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	1500	$40.00	$60,000	0	$40.00	$0.00	1500	$40.00	$60,000.00
Purchases:
30-Jan	2900	$52.00	$150,800	1150	$52.00	$59,800.00	1750	$52.00	$91,000.00
1-May	1600	$70.00	$112,000	1600	$70.00	$112,000.00	0	$70.00	$0.00
Total	6000		$322,800	2750		$171,800.00	3250		$151,000.00

Solution b:

Computation of COGS and ending inventory - Periodic Weighted Average cost method
Particulars	Cost of goods available for sale			Cost of goods sold - Average cost			Ending Inventory - Average cost
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	1500	$40.00	$60,000
Purchases:
30-Jan	2900	$52.00	$150,800
1-May	1600	$70.00	$112,000
Total	6000	$53.800	$322,800	2750	$53.800	$147,950	3250	$53.800	$174,850

Solution c:

Computation of COGS and ending inventory - Periodic FIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	1500	$40.00	$60,000	1500	$40.00	$60,000.00	0	$40.00	$0.00
Purchases:
30-Jan	2900	$52.00	$150,800	1250	$52.00	$65,000.00	1650	$52.00	$85,800.00
1-May	1600	$70.00	$112,000	0	$70.00	$0.00	1600	$70.00	$112,000.00
Total	6000		$322,800	2750		$125,000.00	3250		$197,800.00

Solution d:

Computation of COGS and ending inventory - Specific Identification
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	1500	$40.00	$60,000	1500	$40.00	$60,000.00	0	$40.00	$0.00
Purchases:
30-Jan	2900	$52.00	$150,800	690	$52.00	$35,880.00	2210	$52.00	$114,920.00
1-May	1600	$70.00	$112,000	560	$70.00	$39,200.00	1040	$70.00	$72,800.00
Total	6000		$322,800	2750		$135,080.00	3250		$187,720.00