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. Unit Cost Units 1,850 Transactions Beginning inventory, January 1 Transactions during the year: a. Purchase, January 30 b. Sale, March 14 ($109 each) c. Purchase, May 1 d. Sale, August 31 ($180 each) 2,550 (1,460) 1.210 (1,950) 1. 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. Cost of Goods Sold Ending Inventory

Answer 1

Solution: Calculation of Cost of Goods Sold and Closing Inventory as per LIFO Method

Date	Purchased			Cost of Goods Sold			Balance in Inventory
	Units	Unit Cost	Total	Units	Unit Price	Total	Units	Unit Cost LIFO	Total
Jan-01							1,850.00	50	92,500.00
Jan-30	2,550.00	62.00	1,58,100.00				1,850.00	50	92,500.00
							2,550.00	62.00	1,58,100.00
							4,400.00		2,50,600.00
Mar-14				1,460.00	62.00	90,520.00	1,850.00	50	92,500.00
							1,090.00	62.00	67,580.00
							2,940.00		1,60,080.00
May-01	1,210.00	80.00	96,800.00				1,850.00	50	92,500.00
							1,090.00	62.00	67,580.00
							1,210.00	80.00	96,800.00
							4,150.00		2,56,880.00
Aug-31				1,210.00	80.00	96,800.00	1,850.00	50	92,500.00
				740.00	62.00	45,880.00	350.00	62.00	21,700.00
				1,950.00		1,42,680.00	2,200.00		1,14,200.00
			Total	3,410.00		2,33,200.00	2,200.00		1,14,200.00

Particulars	$
Cost of Goods Sold	2,33,200.00
Ending Inventory	1,14,200.00