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 1,450 $ 50 Transactions during the year: a. Purchase, January 30 2,150 62 b. Sale, March 14 ($100 each) (1,380 ) c. Purchase, May 1 1,130 80 d. Sale, August 31 ($100 each) (1,550 ) 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

Answer:

• Sale, March 14 (1,380 units) cost of goods sold = $117,200
• Sale, August 31 (1,550 units ) cost of goods = $96,100
• Ending inventory = 1,800 units

Explanation:

a. Cost Of Goods Sold Using LIFO

1. Sale, March 14 (1,380 units)

- from May 1 purchase)

1,130 units at $90= 1130*90= $101,700

+

from January 30 purchase

250 units from 2,150 units at $62 = $15,500

Total= 15,500+101,700= $117,200

2. Sale, August 31 (1,550 units )

- from January 30 purchase

1,550 units from 1900 units leftover

1550 at $62 = 1550*62= $96,100

b. Ending inventory

350 units leftover from January 30 purchase + 1,450 units of Beginning inventory, January 1 = 1,800 units