You are provided with the following information for Gobler Inc, Gobler Inc. uses

Question

You are provided with the following information for Gobler Inc, Gobler Inc. uses the periodic method of accounting for its inventory transactions. March 1 Beginning inventory 2,000 liters at a cost of 62 per liter. March 3 Purchased 2,400 liters at a cost of 62 per liter. March 5 Sold 2,300 liters for $1.05 per liter. March 10 Purchased 4,150 liters at a cost of 67 per liter. March 20 Purchased 2,550 liters at a cost of 76 per liter. March 30 Sold 5,100 liters for $1.35 per liter. Calculate the value of ending inventory that would be reported on the balance sheet, under each of the following cost flow assumptions. (1) Specific identification method assuming: (i) The March 5 sale consisted of 1.000 liters from the March l beginning inventory and 1,300 liters from the March 3 purchase; and (ii) The March 30 sale consisted of the following number of units sold from beginning inventory and each purchase: 400 liters from March 1; 550 liters from March 3; 2,800 liters from March 10; 1,350 liters from March 20. (2) FIFO (3) LIFO

Explanation / Answer

Date

Buy/Sell

quantity

Price

Mar-01

Inventory

2000

0.58

Mar-03

Buy

2400

0.62

Mar-05

Sell

-2300

1.05

Mar-10

Buy

4150

0.67

Mar-20

Buy

2550

0.76

Mar-30

Sell

-5100

1.35

1)

Specific Identification Method

Date

Buy/Sell

Inventory Balance

Price

Price*Inventory

Mar-01

Inventory

600

0.58

348

Mar-03

Buy

550

0.62

341

Mar-10

Buy

1350

0.67

904.5

Mar-20

Buy

1200

0.76

912

Ending Inventory

2505.5

2)

Total Inventory Sold=7400 unit, Inventory Balance =3700

FIFO

Date

Buy/Sell

Inventory Balance

Price

Price*Inventory

Mar-01

Inventory

0

0.58

0

Mar-03

Buy

0

0.62

0

Mar-10

Buy

1150

0.67

770.5

Mar-20

Buy

2550

0.76

1938

Ending Inventory

2708.5

3)

Total Inventory Sold=7400 unit, Inventory Balance =3700

LIFO

Date

Buy/Sell

Inventory Balance

Price

Price*Inventory

Mar-01

Inventory

2000

0.58

1160

Mar-03

Buy

100

0.62

62

Mar-10

Buy

1600

0.67

1072

Mar-20

Buy

0

0.76

0

Ending Inventory

2294

Date

Buy/Sell

quantity

Price

Mar-01

Inventory

2000

0.58

Mar-03

Buy

2400

0.62

Mar-05

Sell

-2300

1.05

Mar-10

Buy

4150

0.67

Mar-20

Buy

2550

0.76

Mar-30

Sell

-5100

1.35

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