Question

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 1,800 $ 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 ) Calculate the cost of goods sold and ending inventory for Gladstone Company assuming it applies the LIFO cost method perpetually at the time of each sale.

Answer 1

Cost of goods sold = $229,300

Ending inventory = $111,700

	Purchases			Cost of goods sold			Inventory in hand
	Units	Cost per unit	Total cost	Units	Cost per unit	Total cost	Units	Cost per unit	Total cost
Beginning inventory							1800	50	90000
Jan 30	2500	62	155000				1800	50	90000
							2500	62	155000
Mar 14				1450	62	89900	1800	50	90000
							1050	62	65100
May 1	1200	80	96000				1800	50	90000
							1050	62	65100
							1200	80	96000
Aug 31				1200	80	96000	1800	50	90000
				700	62	43400	350	62	21700
Total						229300			111700