Question

Required information

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. Assume that ending inventory is made up of 40 units from the March 14 purchase, 80 units from the July 30 purchase, and all 190 units from the October 26 purchase. Using the specific identification method, calculate the following.

	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 290 Mar. 14 Purchase 500 July 30 Purchase 490 Oct. 26 Purchase 190 1,470 b) Gross Margin using Specific Identification Less: Equals:

Answer 1

Answer

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	290	$13.60	290	$13.60	$3,944	0	$13.60	$0
Mar. 14	Purchase	500	$18.60	460	$18.60	$8,556	40	$18.60	$744
Jul.30	Purchase	490	$23.60	410	$23.60	$9,676	80	$23.60	$1,888
Oct. 26	Purchase	190	$28.60	0	$28.60	$0	190	$28.60	$5,434
		1470		1160		$22,176	310		$8,066

Sales Revenue (1160 units x $ 43.60)	$50,576
Less: Cost of Goods Sold	$22,176
Equals: Gross Profits	$28,400