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. TransactionsUnitsUnit CostBeginning inventory, January 1 3,100 $55 Transactions during the year: a.Purchase, January 30 4,850 66 b.Sale, March 14 ($100 each) (3,000) c.Purchase, May 1 3,550 85 d.Sale, August 31 ($100 each) (3,600) 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.Required: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.) ## Inventory Costing Methods Exercise### Scenario:You're tasked with computing the amount of goods available for sale, the ending inventory, and the cost of goods sold as of December 31. This computation should be conducted using different inventory costing methods, with rounding as specified.### Transactions Data:- **Beginning Inventory, January 1:** - Units: 3,100 - Unit Cost: $55- **Transactions during the year:** 1. **Purchase, January 30:** - Units: 4,850 - Unit Cost: $66 2. **Sale, March 14:** - Units Sold: 3,000 3. **Purchase, May 1:** - Units: 3,550 - Unit Cost: $85 4. **Sale, August 31:** - Units Sold: 3,600### Specific Instructions:For the specific identification method:- The March 14 sale includes two-fifths from the beginning inventory and three-fifths from the January 30 purchase.- The August 31 sale consists of the remainder from the beginning inventory, with the balance taken from the May 1 purchase.### Required Computation:1. **Compute** the amount of goods available for sale, ending inventory, and cost of goods sold by each costing method: - Last-in, first-out (LIFO) - Weighted average cost - First-in, first-out (FIFO) - Specific identification**Note:** Intermediate calculations to be rounded to two decimal places, and final answers rounded to the nearest whole dollar.### Table: Costing Methods Overview| Method | Amount of Goods Available for Sale | Ending Inventory | Cost of Goods Sold ||---------------------------|------------------------------------|------------------|--------------------|| a. Last-in, first-out | $792,350 | | || b. Weighted average cost | $792,350 | | || c. First-in, first-out | $792,350 | | || d. Specific identification| $792,350 | | |This exercise will help in understanding how different inventory costing methods can impact financial reporting and inventory management.

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Description: 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 th

Inventory cost valuation has different kinds of following methods: a) FIFO: Under this method, it is…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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
Beginning inventory, January 1		3,100		$	55
Transactions during the year:
a.	Purchase, January 30		4,850			66
b.	Sale, March 14 ($100 each)		(3,000	)
c.	Purchase, May 1		3,550			85
d.	Sale, August 31 ($100 each)		(3,600	)

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.

Required:

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.)

## Inventory Costing Methods Exercise

### Scenario:
You're tasked with computing the amount of goods available for sale, the ending inventory, and the cost of goods sold as of December 31. This computation should be conducted using different inventory costing methods, with rounding as specified.

### Transactions Data:
- **Beginning Inventory, January 1:**
- Units: 3,100
- Unit Cost: $55

- **Transactions during the year:**
1. **Purchase, January 30:**
- Units: 4,850
- Unit Cost: $66
2. **Sale, March 14:**
- Units Sold: 3,000
3. **Purchase, May 1:**
- Units: 3,550
- Unit Cost: $85
4. **Sale, August 31:**
- Units Sold: 3,600

### Specific Instructions:
For the specific identification method:
- The March 14 sale includes two-fifths from the beginning inventory and three-fifths from the January 30 purchase.
- The August 31 sale consists of the remainder from the beginning inventory, with the balance taken from the May 1 purchase.

### Required Computation:
1. **Compute** the amount of goods available for sale, ending inventory, and cost of goods sold by each costing method:
- Last-in, first-out (LIFO)
- Weighted average cost
- First-in, first-out (FIFO)
- Specific identification

**Note:** Intermediate calculations to be rounded to two decimal places, and final answers rounded to the nearest whole dollar.

### Table: Costing Methods Overview

| Method | Amount of Goods Available for Sale | Ending Inventory | Cost of Goods Sold |
|---------------------------|------------------------------------|------------------|--------------------|
| a. Last-in, first-out | $792,350 | | |
| b. Weighted average cost | $792,350 | | |
| c. First-in, first-out | $792,350 | | |
| d. Specific identification| $792,350 | | |

This exercise will help in understanding how different inventory costing methods can impact financial reporting and inventory management.

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