PA7-1 (Algo) Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory Sys [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 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) Units 2,700 b. Weighted average cost. c. First-in, first-out. 3,050 (2,350) 1,750 (2,000) Unit Cost $45 60 Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning invento three-fifths from the purchase of January 30. Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December following inventory costing methods: a. Last-in, first-out. 75 Proy d. Specific identification, assuming that the March 14 sale was selected two-fifths from the beginning inventory and three-fi the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventor balance from the purchase of May 1. 22-a. Of the four methods, which will result in the highest gross profit? 2-b. Of the four methods, which will result in the lowest income taxes? Camulata thin natin her anbaring van in tha baha hala 1 of 4 ‒‒‒ E under each of th Next >
PA7-1 (Algo) Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory Sys [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 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) Units 2,700 b. Weighted average cost. c. First-in, first-out. 3,050 (2,350) 1,750 (2,000) Unit Cost $45 60 Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning invento three-fifths from the purchase of January 30. Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December following inventory costing methods: a. Last-in, first-out. 75 Proy d. Specific identification, assuming that the March 14 sale was selected two-fifths from the beginning inventory and three-fi the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventor balance from the purchase of May 1. 22-a. Of the four methods, which will result in the highest gross profit? 2-b. Of the four methods, which will result in the lowest income taxes? Camulata thin natin her anbaring van in tha baha hala 1 of 4 ‒‒‒ E under each of th Next >
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 41BE: ( Appendix 6B) Inventory Costing Methods: Periodic Inventory Systems. Refer to the information for...
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![### PA7-1 (Algo) 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 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:
| Transactions | Units | Unit Cost |
|-------------------------------------|--------|-----------|
| Beginning inventory, January 1 | 2,700 | $45 |
| Transactions during the year: | | |
| a. Purchase, January 30 | 3,050 | $60 |
| b. Sale, March 14 ($100 each) | (2,350)| |
| c. Purchase, May 1 | 1,750 | $75 |
| d. Sale, August 31 ($100 each) | (2,000)| |
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.
#### 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:
a. Last-in, first-out.
b. Weighted average cost.
c. First-in, first-out.
d. Specific identification, assuming that 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.
2-a. Of the four methods, which will result in the highest gross profit?
2-b. Of the four methods, which will result in the lowest income taxes?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcb76c74f-33f9-4776-941a-47446e3aad13%2F6132b13d-b7a3-4795-be06-8ad165089871%2F92v2fr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### PA7-1 (Algo) 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 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:
| Transactions | Units | Unit Cost |
|-------------------------------------|--------|-----------|
| Beginning inventory, January 1 | 2,700 | $45 |
| Transactions during the year: | | |
| a. Purchase, January 30 | 3,050 | $60 |
| b. Sale, March 14 ($100 each) | (2,350)| |
| c. Purchase, May 1 | 1,750 | $75 |
| d. Sale, August 31 ($100 each) | (2,000)| |
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.
#### 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:
a. Last-in, first-out.
b. Weighted average cost.
c. First-in, first-out.
d. Specific identification, assuming that 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.
2-a. Of the four methods, which will result in the highest gross profit?
2-b. Of the four methods, which will result in the lowest income taxes?
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