Question

Required information The following information applies to the questions displayed below) art 1 of 3 Herrning Co. reported the following current-year purchases and sales for its only product. Skipped Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Mar. 14. Purchase Mar.15 Sales July30 Purchase Oct. 5 Sales Oct. 26 Purchase Totals Units Acquired at Cost Units Sold at Retail 235 units@ $11.40 = $ 2,679 170 units@ $41.40 360 units@ $16.40 = 5,994 290 units@ $41.40 435 units@ $21.40 = 9,309 410 units@ $41.40 135 $26.40 3,564 1,165 units E $21,456 870 units eBook un IN 1 Print Required: Hemming uses a perpetual inventory system. References 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

1) Cost assigned to Ending inventory and cost of goods sold using FIFO

Ending inventory = (1165-870) = 295 Units = (135*26.40+160*21.40) = 6988

Cost of goods sold = 21456-6988 = 14468

2) Cost assigned to ending inventory and cost of goods sold using LIFO

Ending inventory = (135*26.40+25*21.40+70*16.40+65*11.40) = 5988

Cost of goods sold = 21456-5988 = 15468

3) Gross margin

	FIFO	LIFO
Sales revenue	870*41.40 = 36018	36018
Cost of goods sold	-14468	-15468
Gross profit	21550	20550