PA7-1 Analyzing the Effects of Four Alternative Inventory Methods in a Periodic

Question

PA7-1 Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory System [LO 7-3] 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 1,700 $45 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) 3,800 (2,100) 2,500 (2,600) 56 75 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 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.) Cost of Goods Sold Amount of Goods Available for Sale Ending Inventory a. Last-in, first-out b. Weighted average cost C. First-in, first-out d. Specific identification

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 1700 45 76500 1700 45 76500 Purchasse 30-Jan 3800 56 212800 3000 56 168000 800 56 44800 1-May 2500 75 187500 2500 75 187500 TOTAL 8000 476800 4700 244500 3300 232300 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 1700 45 76500 1700 45 76500 Purchasse 30-Jan 3800 56 212800 2200 56 123200 1600 56 89600 1-May 2500 75 187500 2500 75 187500 TOTAL 8000 476800 4700 310700 3300 166100 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 1700 45 76500 Purchasse 30-Jan 3800 56 212800 1-May 2500 75 187500 TOTAL 8000 59.6 476800 4700 59.6 280120 3300 59.6 196680 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC SPECIFIC IDENTIFICATION METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 1700 45 76500 1700 45 76500 Purchasse 30-Jan 3800 56 212800 1260 56 70560 2540 56 142240 1-May 2500 75 187500 1740 75 130500 760 75 57000 TOTAL 8000 59.6 476800 4700 277560 3300 199240 Cost of Available for sale Ending Inv. COGS a. Last in first out 476800 166100 310700 b. Average 476800 196680 280120 c. First in First out 476800 232300 244500 d. Specific identification 476800 199240 277560

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