Question

Inventory Costing Methods-Periodic Method The Gleem Sales Corporation uses the periodic inventory system. On January 1.2015. Gleem had 2,600 units of product B with a unit cost of s40 per unit. A summary of purchases and sales during 2015 follows: Unit Units Units Cost Purchased Sold Jan.3 Mar.8 $44 3,000 June 13 Sept.19 46 Nov.23 Dec.28 1,600 2,000 800 48 1,200 1,800 Required a. Assume that Gleem uses the first-in, first-out method Compute the cost of goods sold for 2015 and the ending inventory balance at December 31. 2015, for product B and the ending inventory balance at December 31, 2015. for product B for 2015 and the ending inventory balance at December 31, 2015. for product B b. Assume that Gleem uses the last-in, first-out method. Compute the cost of goods sold for 2015 C Assume that Gleem uses the weighted-average cost method. Compute the cost of goods sold Do not round until your final answers. Round answers to the nearest dollar Frsih FiroU 0 Ending Invensory

Answer 1

Solution a:

FIFO (Periodic)
Particulars	Units	Cost per unit	Total
Beginning Inventory	2600	$40.00	$104,000.00
Purchases:
8-Mar	3000	$44.00	$132,000.00
19-Sep	800	$46.00	$36,800.00
23-Nov	1200	$48.00	$57,600.00
Total Purchases	5000		$226,400.00
Goods available for Sale	7600		$330,400.00
Cost of goods sold:
Units from beginning inventory	2600	$40.00	$104,000.00
Units from march 8 purchase	2800	$44.00	$123,200.00
Units from Sep 19 purchase	0	$46.00	$0.00
Units from Nov 23 purchase	0	$48.00	$0.00
Total cost of goods sold	5400		$227,200.00
Ending Inventory	2200		$103,200.00

Solution b:

LIFO (Periodic)
Particulars	Units	Cost per unit	Total
Beginning Inventory	2600	$40.00	$104,000.00
Purchases:
8-Mar	3000	$44.00	$132,000.00
19-Sep	800	$46.00	$36,800.00
23-Nov	1200	$48.00	$57,600.00
Total Purchases	5000		$226,400.00
Goods available for Sale	7600		$330,400.00
Cost of goods sold:
Units from beginning inventory	400	$40.00	$16,000.00
Units from march 8 purchase	3000	$44.00	$132,000.00
Units from Sep 19 purchase	800	$46.00	$36,800.00
Units from Nov 23 purchase	1200	$48.00	$57,600.00
Total cost of goods sold	5400		$242,400.00
Ending Inventory	2200		$88,000.00

Solution c:

Weighted Average (Periodic)
Particulars	Units	Cost per unit	Total
Beginning Inventory	2600	$40.00	$104,000
Purchases:
8-Mar	3000	$44.00	$132,000
19-Sep	800	$46.00	$36,800
23-Nov	1200	$48.00	$57,600
Total Purchases	5000		$226,400
Goods available for Sale	7600	$43.47	$330,400
Cost of goods sold	5400	$43.47	$234,758
Ending Inventory	2200		$95,642

Solution d:

1. Reflect the likely goods flow through the business - Weighted average

2. Minimize income taxes for the period = LIFO

3. Report the largest amont of net income for the period = FIFO