Question

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

Requieu UMTALIUI [The following information applies to the questions displayed below.] Hemming Co. reported the following current-year purchases and sales for its only product. Units Sold at Retail Units Acquired at Cost 265 units @ $12.60 = $ 3,339 430 units @ $17.60 = 7,568 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Mar. 14 Purchase Mar. 15 Sales July 30 Purchase Oct. 5 Sales Oct. 26 Purchase Totals 225 units @ $42.60 370 units @ $42.60 465 units @ $22.60 = 10,599 440 units @ $42.60 = 165 units @ $27.60 1,325 units 4,554 $25,970 1,035 units 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 1

Hemming Co. FIFO Perpetual Cost of goods sold Purchases Balance Date #OF Units Cost per unit Total Cost #OF Units Cost per unit Total Cost #OF Units Cost per unit Total Cost 3339 Jan-01 265 12.6 Jan-10 12.6 225 12.6 2835 40 504 Mar-14 12.6 430 17.6 7568 40 504 17.6 430 7568 Mar-15 12.6 1760 40 504 100 17.6 330 17.6 5808 Jul-30 465 22.6 10509 100 17.6 1760 10509 465 22.6 1760 22.6 Oct-05 100 17.6 125 2825 340 22.6 7684 2825 Oct-26 165 27.6 4554 125 22.6 165 27.6 4554 Oct-31 22.6 125 2825 165 27.6 4554 Purchases Ending 22631 COGS 18591 7379 LIFO Perpetual Balance Purchases Cost of goods sold #OF Units Cost per unit Total Cost #OF Units Cost per unit Total Cost #OF Units Cost per unit Total Cost Date Jan-01 265 12.6 3339 12.6 Jan-10 225 12.6 2835 40 504 Mar-14 12.6 430 17.6 7568 40 504 17.6 430 7568 6512 12.6 Mar-15 370 17.6 40 504 60 17.6 1056 Jul-30 465 22.6 10509 40 12.6 504 1056 60 17.6 10509 465 22.6 Oct-05 440 22.6 9944 40 12.6 504 17.6 60 1056 22.6 25 565 12.6 Oct-26 165 27.6 4554 40 504 60 17.6 1056 25 22.6 565 165 27.6 4554 Oct-31 40 12.6 504 17.6 1056 60 22.6 25 565 165 27.6 4554 Purchases Ending 22631 COGS 19291 6679

FIFO Perpetual Sales | #OF Units Selling Price Total Cost Date Jan-10 225 42.6 9585 Mar-15 370 42.6 15762 Oct-05 440 42.6 18744 1035 44091 COGS -18591 Gross Margin 25500 LIFO Perpetual Sales | #OF Units Selling Price Total Cost Date Jan-10 225 42.6 9585 370 Mar-15 42.6 15762 Oct-05 440 42.6 18744 1035 44091 COGS -19291 Gross Margin 24800