Problem

Harold Co. reported the following current-year purchases and sales data for its only produ...

Harold Co. reported the following current-year purchases and sales data for its only product.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.    1

 Beginning inventory

100 units @ $10 = $1,000

 

Jan.  10

 Sales 

 

90 units @ $40

Mar. 14

 Purchase 

250 units @ $15 = 3,750

 

Mar. 15

 Sales 

 

140 units @ $40

July  30

 Purchase 

400 units @ $20 = 8,000

 

Oct.    5

 Sales 

 

300 units @ $40

Oct.  26

 Purchase 

600 units @ $25 = 15,000

 

 

 Totals 

1,350 units              $27,750

530 units

Harold uses a perpetual inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Compute the gross margin for each method.

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