Question

Hemming Co. reported the following current-year purchases and sales for its only product Units Acquired at Cost 250 units @ $12.00 - $ 3,000 Units Sold at Retail 200 units @ $42.00 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Mar. 14 Purchase Mar.15 Sales July 30 Purchase Oct. 5. Sales Oct.26 Purchase 400 units @ $17.00 = 6,800 360 units @ $42.00 450 units $22.00 = 9,900 420 units @ $42.00 150 units @ $27.00 1,250 units 4,050 $23,750 Totala 980 unita नि 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 is complete but not entirely correct. Complete this questions by entering your answers in the below tabs. Required 1 Required 2 Required 3 Compute the gross margin for FIFO method and LIFO method. Sales revenue Less: Cost of goods sold Gross margin FIFO: LIFO: $ 41,160 $ 41 160 17,410 19.1108 S 23.750 $ 22,050 < Required 2 < Prev 5 of 5 here to search O ва

I'm have problems with "less cost of goods sold" for both FIFO and LIFO. Could someone please help me. I'm sure its simple.

Answer 1

Required cost of goods sold under FIFO and LIFO method.

Under FIFO method Goods first bought is sold first. Following table shows the computation of goods sold under FIFO method

	Particulars	Cost of goods Purchased	Cost of Goods Sold	Balance
		No: of units	Unit Cost	Total Cost	No: of units	Unit Cost	Total Cost	No: of units	Unit Cost	Total Cost
Jan 1	Opening							250	12	3,000
Jan 10	Sales				200	12	2,400	50	12	600
Mar 14	Purchases	400	17	6,800				50	12	600
400	17	6,800
Mar 15	Sales				50	12	600	90	17	1,530
310	17	5,270
July 30	Purchases	450	22	9,900				90	17	1,530
450	22	9,900
Oct 5	Sales				90	17	1,530	120	22	2,640
330	22	7,260
Oct 26	Purchases	150	27	4,050				120	22	2,640
150	27	4,050
	Total Purchases			20,750	COGS		17,060

Under LIFO method Goods bought last is sold first. Following table shows the computation of goods sold under LIFO method

	Particulars	Cost of goods Purchased	Cost of Goods Sold	Balance
		No: of units	Unit Cost	Total Cost	No: of units	Unit Cost	Total Cost	No: of units	Unit Cost	Total Cost
Jan 1	Opening							250	12	3,000
Jan 10	Sales				200	12	2,400	50	12	600
Mar 14	Purchases	400	17	6,800				50	12	600
400	17	6,800
Mar 15	Sales				360	17	6,120	50	12	600
40	17	680
July 30	Purchases	450	22	9,900				50	12	600
40	17	680
450	22	9,900
Oct 5	Sales				420	22	9,240	50	12	600
40	17	680
30	22	660
Oct 26	Purchases	150	27	4,050				50	12	600
40	17	680
30	22	660
150	27	4,050
	Total Purchases			20,750	COGS		17,760

$\therefore$ Cost of goods sold

FIFI - $17,060 LIFO - $17,760