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 Jan. 1 Beginning inventory Jan. 18 Sales Mar. 14 Purchase Mar. 15 Sales July 30 Purchase Oct. 5 Sales Oct. 26 Purchase Totals Units Acquired at Cost Units Sold at Retail 200 units @ $10 = $ 2,000 150 units @ $40 350 units @ $15 = 5,250 300 units @ $40 450 units @ $20 - 9,000 430 units @ $40 100 units @ $25 - 2,500 1,100 units $18,750 880 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.

Answer 1

Cost of Goods Sold - Mar 15 Cost of Goods Sold - Oct 5 Perpetual FIFO Cost of Goods Available for Sale Cost of Goods Sold - Jan 10 Cost of Goods # of Cost per # of Cost per Cost of Available for Units unit | Units unit Goods sold Sale 2,000 150 $ 10 $ 1,500 # of Units Cost per Cost of unit Goods sold #of Cost per Units | unit Cost of Goods sold Inventory Balance # of units in Cost per Ending ending unit inventory inventory 50 $ 10 $ 500 250 $ 15 $ 3,750 Beg Inventory 01-Jan Purchases: Mar 14 July 30 Oct 26 Total 100 $ 330 $ 15$ 20 $ 1,500 6,600 350 $ 450 $ 100 $ 1100 15 $ 20 $ 25$ $ 5,250 9,000 2,500 18,750 120 $ 100 $ 220 20 $ 25 $ $ 2,400 2,500 4,900 150 $ 1,500 300 $ 4,250 430 $ 8,100

2.) Cost of Goods Sold - Jan 10 Cost of Goods Sold - Mar 15 Cost of Goods Sold - Oct 5 Perpetual LIFO Cost of Goods Available for Sale Cost of Goods # of Cost per Units unit Available for Sale 200 $ 10 $ 2,000 # of Units Cost per Cost of unit Goods sold # of Units Cost per Cost of unit Goods sold # of Units Cost per Cost of unit Goods sold Inventory Balance # of units in Cost per Ending ending unit inventory inventory 50 $ 10 $ 500 01-Jan 150 $ 10 $ 1,500 300 $ 15 $ 4,500 Beg Inventory Purchases: Mar July Oct Total 14 30 15 20 25 430 $ 20 $ 350 $ 450 $ 100 $ 1100 8,600 $ $ $ $ 5,250 9,000 2,500 18,750 50 $ 20 $ 100 $ 220 15 20 25 $ $ $ $ 750 400 2,500 4,150 26 150 $ 1,500 300 $ 4,500 430 $ 8,600

Ending Inventory Cost of Goods Sold $ $ FIFO 4,900 $ 13,850 $ LIFO 4,150 14,600

Sales Less: Cost of Goods Sold $ Gross Margin FIFO 35,200 $ 13,850 $ 21,350 $ LIFO 35,200 14,600 20,600 $