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 Sold at Retail Units Acquired at Cost 295 units @ $13.80 = $ 4,071 240 units @ $43.80 480 units @ $18.80 - 9,024 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 420 units @ $43.80 495 units @ $23.80 - 11,781 465 units @ $43.80 - 195 units @ $28.80 1,465 units 5,616 $30, 492 1,125 units Exercise 5-7 Periodic: Inventory costing methods-FIFO and LIFO LO P1 Required: Hemming uses a periodic inventory system. (a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. (b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. (c) Compute the gross margin for each method.

Answer 1

FIFO Method
	Cost of goods available for sale			Cost of goods sold			Ending inventory
	Units	cost per unit	Cost of goods availabe for sale($)	Units sold	cost per unit	Cost of goods sold ($)	units in ending inventory	cost per unit	Ending inventory ($)
Begening inventory	295	13.80	4071.00	240	13.80	3312.00	55	13.80	759.00
Purchases
Mar. 14	480	18.8	9024.00	420		7621.00	115	18.80	2162.00
Jul. 30	495	23.8	11781.00	465		10492.00	145	23.80	3451.00
Oct. 26	195	28.8	5616.00				340	26.67	9067.00
Total			30492			21425.00	340		9067.00
LIFO Method
	Cost of goods available for sale			Cost of goods sold			Ending inventory
	Units	cost per unit	Cost of goods availabe for sale($)	Units sold	cost per unit	Cost of goods sold ($)	units in ending inventory	cost per unit	Ending inventory ($)
Begening inventory	295	13.80	4071.00	240	13.80	3312.00	55	13.80	759.00
Purchases
Mar. 14	480	18.8	9024.00	420	18.80	7896.00	115		1887.00
Jul. 30	495	23.8	11781.00	465	23.80	11067.00	145		2601.00
Oct. 26	195	28.8	5616.00				340	24.17	8217.00
Total			30492			22275.00	340		8217.00
Gross margin for each method
Net sales
units sold	sale proce	net sales
240	43.8	10512.00
420	43.8	18396.00
465	43.8	20367.00
		49275.00
		FIFO	LIFO
Sales		49275.00	49275.00
Cost of goods sold		21425.00	22275.00
Gross margin		27850.00	27000.00