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. Units Sold at Retail Units Acquired at Cost. 250 units @ $12.00 = $ 3,000 200 units @ $42.00 400 units @ $17.00 = 6,800 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 360 units @ $42.00 450 units @ $22.00 = 9,900 420 units @ $42.00 150 units @ $27.00 = 1,250 units 4,050 $23,750 980 units

Answer 1

Ans. 1	FIFO:	Purchase			Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	250	$12.00	$3,000				250	$12.00	$3,000
	10-Jan				200	$12.00	$2,400	50	$12.00	$600
	14-Mar	400	$17.00	$6,800				50	$12.00	$600
								400	$17.00	$6,800
	15-Mar				50	$12.00	$600
					310	$17.00	$5,270	90	$17.00	$1,530
	30-Jul	450	$22.00	$9,900				90	$17.00	$1,530
								450	$22.00	$9,900
	5-Oct				90	$17.00	$1,530
					330	$22.00	$7,260	120	$22.00	$2,640
	26-Oct	150	$27.00	$4,050				120	$22.00	$2,640
								150	$27.00	$4,050
	Total				Cost of goods sold		$17,060	Ending inventory		$6,690
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.
Ans. 2	LIFO:	Purchase			Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	250	$12.00	$3,000				250	$12.00	$3,000
	10-Jan				200	$12.00	$2,400	50	$12.00	$600
	14-Mar	400	$17.00	$6,800				50	$12.00	$600
								400	$17.00	$6,800
	15-Mar				360	$17.00	$6,120	50	$12.00	$600
								40	$17.00	$680
	30-Jul	450	$22.00	$9,900				50	$12.00	$600
								40	$17.00	$680
								450	$22.00	$9,900
	5-Oct				420	$22.00	$9,240	50	$12.00	$600
								40	$17.00	$680
								30	$22.00	$660
	26-Oct	150	$27.00	$4,050				50	$12.00	$600
								40	$17.00	$680
								30	$22.00	$660
								150	$27.00	$4,050
	Total				Cost of goods sold		$17,760	Ending inventory		$5,990
	*In LIFO method the units that have purchased last, are released the first one and the ending inventory
	units remain from the first purchases.
Ans. 3			FIFO	LIFO
	Sales		$41,160	$41,160
	(-) Cost of goods sold		($17,060)	($17,760)
	Gross margin		$24,100	$23,400
	*Calculation of sales:
	Date	Units	Rate	Cost
	10-Jan	200	$42.00	$8,400
	15-Mar	360	$42.00	$15,120
	5-Oct	420	$42.00	$17,640
	Total sales			$41,160