Question

[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

255

units

@ $12.20

=

$

3,111

Jan.

10

Sales

210

units

@ $42.20

Mar.

14

Purchase

410

units

@ $17.20

=

7,052

Mar.

15

Sales

350

units

@ $42.20

July

30

Purchase

455

units

@ $22.20

=

10,101

Oct.

5

Sales

430

units

@ $42.20

Oct.

26

Purchase

155

units

@ $27.20

=

4,216

Totals

1,275

units

$

24,480

990

units

a) Cost of Goods Sold using Specific Identification
	Available for Sale			Cost of Goods Sold			Ending Inventory
Date	Activity	Units	Unit Cost	Units Sold	Unit Cost	COGS	Ending Inventory Units	Unit Cost	Ending Inventory Cost
Jan. 1	Beginning Inventory	255			$0.00	$0		$0.00	$0
Mar. 14	Purchase	410			$0.00	0		$0.00	0
July 30	Purchase	455			$0.00	0		$0.00	0
Oct. 26	Purchase	155			$0.00	0		$0.00	0
		1,275		0		$0	0		$0
b) Gross Margin using Specific Identification
Less:
Equals:

Answer 1

Solution:

a) Cost of goods sold using specific identification
	Available for Sale			Cost of Goods Sold			Ending Inventory
Date	Activity	Units	Unit Cost	Unit Sold	Unit Cost	COGS	Ending Inventory Units	Unit Cost	Ending Inventory Cost
Jan-01	Beginning Inventory	255	$12.20				255	$12.20	$3,111
										Jan-10	Sales			210	$12.20	$2,562	45	$12.20	$549
Mar-14	Purchase	410	$17.20				45	$12.20	$549
							410	$17.20	$7,052
Mar-15	Sales			45	$12.20	$549	105	$17.20	$1,806
				305	$17.20	$5,246
Jul-30	Purchase	455	$22.20				105	$17.20	$1,806
							455	$22.20	$10,101
Oct-05	Sales			105	$17.20	$1,806	130	$22.20	$2,886
				325	$22.20	$7,215
Oct-26	Purchase	155	$27.20				130	$22.20	$2,886
							155	$27.20	$4,216
				Cost of Goods Sold		$17,378	Ending Inventory		$7,102

b) Gross Margin using Specific Identification
	Sales	$41,778
Less:	COGS	$17,378
	Gross Margin	$24,400