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1. Stratford Company reported the following information related to its operations for the year ended December 31, 2019. The owner, Ms. Keith, has asked you,

1.

Stratford Company reported the following information related to its operations for the year ended

December 31, 2019. The owner, Ms. Keith, has asked you, Senior Accountant, to perform

some calculations in an effort to determine which inventory valuation method to select for

financial reporting purposes.

Date

# of Units

Unit Cost

February 17

Beginning inventory

145

$25

May 23

Purchase

193

$28

August 19

Purchase

127

$32

December 31

Purchase

74

$35

The company sold 415 units throughout the year at a price of $60 each.

a) Is this company operating in an inflationary or deflationary environment? Explain how you know. (2 marks)

  1. Compute the dollar value of ending inventory under the following alternative methods:

  1. FIFO (3 marks)

  1. Weighted-average cost (3 marks)

  1. Compute the dollar value of cost of goods sold under the following alternative methods:

  1. FIFO (3 marks)

  1. Weighted-average cost (3 marks)

  1. If Stratford Company sold each unit for $58, calculate the gross profit under the following assumptions:

  1. FIFO (2 marks)

  1. Weighted-average (2 marks)

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