Question

Required information 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. 1e 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. 430 units @ $40 100 units $25 2.500 1,100 units $18.750 80 units Required: Hemming uses a periodic inventory system. Assume that ending inventory is consists of 45 units from the March 14 purchase, 75 units from the July 30 purchase, and all 100 units from the October 26 purchase Using the specific identification method, calculate the (a) the cost of goods sold and (b) the gross profit

Answer 1

(a) Cost of goods sold: $14075

	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	200	10.00	200	10.00	2000	0	0	0
Mar. 14	Purchase	350	15.00	305	15.00	4575	45	15.00	675
Jul. 30	Purchase	450	20.00	375	20.00	7500	75	20.00	1500
Oct. 26	Purchase	100	25.00				100	25.00	2500
		1100		880		14075	220		4675

(b) Gross profit: $21125

Sales (880 x $40)		35200
Less: Cost of Goods Sold		14075
Gross Profit $		21125