Question

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]
  
Hemming Co. reported the following current-year purchases and sales for its only product.
    

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

290

units

@ $13.60

=

$

3,944

Jan.

10

Sales

260

units

@ $43.60

Mar.

14

Purchase

500

units

@ $18.60

=

9,300

Mar.

15

Sales

430

units

@ $43.60

July

30

Purchase

490

units

@ $23.60

=

11,564

Oct.

5

Sales

470

units

@ $43.60

Oct.

26

Purchase

190

units

@ $28.60

=

5,434

Totals

1,470

units

$

30,242

1,160

units

Required:
Hemming uses a perpetual inventory system.
  
1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
3. Compute the gross margin for FIFO method and LIFO method.

Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.

	Perpetual FIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance January 1 290 @ $13.60 = $3,944.00 January 10 March 14 March 15 July 30 October 5 October 26 Totals $0.00

(same chart set up for LIFO)

Answer 1

Requirement: 1 units Date Jan-01 Beginning inventory Jan-10 Sales Mar-14 Purchase 500 Mar-15 Sales 1860 Perpetual FIFO Goods Purchsed Cost of Goods sold Ending Inventory Balance Unit Cost Total Cost units Unit Cost Total Cost units Unit Cost Total Cost 290 13.60 3944 260 13.60 3536 30 13.60 408 18.60 9300 30 13.60 408 500 18.60 9300 530 9708 30 13.60 408 100 18.60 400 18.60 7440 430 7848 100 1860 23.60 11564 100 18.60 1860 490 23.60 11564 590 13424 100 18.60 1860 120 23.60 2832 370 23.60 8732 470 10592 120 2832 28.60 120 23.60 2832 190 28.60 5434 1160 21976 310 8266 Jul-30 Purchase 490 Oct-05 Sales Oct-26 Purchase 5434 Totals

Requirement: 2 Date Jan-01 Beginning inventory Jan-10 Sales Mar-14 Purchase 18.60 500 Mar-15 Sales 70 1302 Jul-30 Purchase Perpetual LIFO Goods Purchased Cost of Goods sold Ending Inventory Balance Units Unit Cost Total Cos Units Unit Cost Total Cost units Unit Cost Total Cost 290 13.60 3944 260 13.60 3536 30 13.60 408 500 9300 30 13.60 408 18.60 9300 530 9708 430 I 18.60 7998 30 | 13.60 408 18.60 430 7998 100 1710 23.60 11564 30 13.60 408 70 18.60 1302 490 23.60 11564 590 13274 470 23.60 11092 30 13.60 18.60 1302 20 23.60 472 | 470 11092 1 20 2182 T28.60 5434 T T T 30 13.60 408 70 18.60 1302 20 23.60 472 190 28.60 5434 1160 22626 310 7616 Oct-05 Sales 408 70 Oct-26 Purchase Totals

Requirement: 3 Gross margin Sales revenue Less: Cost of goods sold Gross margin FIFO 50576 21976 28600 LIFO 50576 22626 27950