Question :

Gladstone Company tracks the number of units purchased and sold all through each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Consider its accounting records provided the subsequent information at the end of the annual accounting period, December 31, 2012.

Transactions       Units    Unit Cost

Beginning inventory, January 1, 2012      2,700    $45       

Transactions during 2012:            

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 )             

Consider that for Specific identification method (item 1d) the March 14, 2012, sale was selected two-fifths from the starting inventory and three-fifths from the purchase of January 30, 2012. Consider that the sale of August 31, 2012, was selected from the remainder of the starting inventory, with the balance from the purchase of May 1, 2012.