Gladstone Company tracks the number of units purchased and sold throughout each
ID: 2566562 • Letter: G
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.
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.
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:
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.
Explanation / Answer
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:
2a) FIFO will give highest gross profit
2b) LIFO will give lowest income taxes
FIFO LIFO Weighted average Specific Identification Beginning inventory 90000 90000 90000 90000 Purchases 251000 251000 251000 251000 Cost of goods available for sale 341000 341000 341000 341000 Ending inventory (1200*80+950*62)=154900 (1800*50+350*62)=111700 (341000/5500)*2150=133300 (1630*62+520*80)=142660 Cost of goods sold 186100 229300 207700 198340Related Questions
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