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Gladstone Distributors Inc.entered into a non-cancellable contract to buy 40,000 litres of linseed oil for $6 per litre for resale purposes.Gladstone intends to resell the oil to retail paint outlets for $10 per litre.The contract was entered into on October 31,2016 for delivery on January 15,2017.Gladstone's year-end is December 31.On December 12,2016,Gladstone's supplier reduces the price to $5.10 per litre due to adverse market conditions.
Requirements:
a.Outline the required accounting treatment assuming that Gladstone expects it can sell the oil for $6.45 per litre.
b.Outline the required accounting treatment assuming that Gladstone expects it can sell the oil for $5.55 per litre.
Series Circuit
An electrical circuit in which components are connected end-to-end, forming a single path for current flow.
Wool Sweater
A clothing item knitted from wool yarn, known for its warmth and moisture-wicking properties.
Magnetomotive Force
The force that drives magnetic flux through a magnetic circuit, analogous to electromotive force in an electrical circuit.
Ampere-Turns
A unit of magnetomotive force in an electromagnetic coil, calculated by multiplying the current (in amperes) by the number of turns in the coil.
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