Gladstone Distributors Inc

question 96

Essay

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.
Required:
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.

Appreciate the significance of unity and coherence in paragraph structure.

Understand the role of sentence structure in managing emphasis and enhancing readability.

Distinguish between effective and ineffective use of sentences including the avoidance of cluttering phrases, maintaining sentence variety, and subordinating ideas appropriately.

Identify and eliminate redundant words in writing.

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Definitions:

Disposable Income

Households' available economic resources for spending and saving post-tax.

Disposable Income

The amount of money an individual or household has to spend or save after taxes have been deducted.

Savings

Money that is set aside from disposable income, often placed in interest-bearing accounts for future use or investment.

Inventory Investment

The commitment of resources towards the acquisition and holding of stocks or goods to be sold or used in future production processes.