Question
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)
- Compute the dollar value of ending inventory under the following alternative methods:
- FIFO (3 marks)
- Weighted-average cost (3 marks)
- Compute the dollar value of cost of goods sold under the following alternative methods:
- FIFO (3 marks)
- Weighted-average cost (3 marks)
- If Stratford Company sold each unit for $58, calculate the gross profit under the following assumptions:
- FIFO (2 marks)
- Weighted-average (2 marks)
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