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. Units Aequired at Cost 245 units $11.80 $2,891 Units sold at Retail 190 units e $41.80 390 units @ $16.80 - 6,552 Date Activities Jan. 1 beginning inventory Jan. 10 Sales Mar. 14 Purchase Mar. 15 Sales July 30 Purchase Det. 5 Sales Oct. 26 Purchase Totals 350 units e $41.80 445 units $21.80 - 9,701 430 units @ $41.80 145 units @ $26.80 - 1,225 units 3,886 $23,030 970 units Exercise 5-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1 Required: Hemming uses a perpetual inventory system. ne 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

Correct Answer:

	FIFO	LIFO
Ending Inventory	$                     6,284	$                     5,534
Cost of Goods Sold	$                  16,746	$                  17,496

Working:

		FIFO	LIFO
A	Sales Revenue 41.80 * (190+350+430)	$                   40,546.00	$            40,546.00
B	Cost of goods sold	$                   16,746.00	$            17,496.00
A-B	Gross Margin	$                   23,800.00	$            23,050.00

Working:

	FIFO
A	Total Units Available for sale			1225		$               23,030
	Units Sold			970
	Ending Inventory Units			255
	Valuation
	Cost of Goods Sold		245		$                         11.80	$            2,891.00
			390		$                         16.80	$                  6,552
			335		$                         21.80	$            7,303.00
						$                         -
B	Cost of Goods Sold		970	units		$               16,746
A-B	Ending Inventory		255	units		$              6,284.0

	LIFO
A	Total Units Available for sale			1225		$               23,030
	Units Sold			970
	Ending Inventory Units			255
	Valuation
	Cost of Goods Sold		190		$                         11.80	2,242.00
			350		$                         16.80	5,880.00
			430		$                         21.80	9,374.00
B	Cost of Goods Sold		970	units		$         17,496.00
A-B	Ending Inventory		255	units		$            5,534.00

End of answer.

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