Question

Hemming Co. reported the following current-year purchases and sales for its only product. Units Sold at Retail Units Acquired at Cost 260 units @ $12.40 - $ 3,224 215 units @ $42.40 420 units @ $17.40 = 7,308 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 380 units @ $42.40 460 units @ $22.40 = 10,304 425 units @ $42.40 160 units @ $27.40 - 1,300 units 4,384 $ 25, 220 1,020 units cercise 5-7 Periodic: Inventory costing methods-FIFO and LIFO LO P1 quired: mming uses a periodic inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. Compute the gross margin for each method.

explain the answers please!

Answer 1

a) Periodic FIFO Ending Inventory No of Cost of goods Available for sale No of Cost of goods Cost per Available for units unit sale 260 12.40 3224 Cost of Goods sold Cost per cost of goods 1 unit sold No of Cost per unit Ending Inventory units units 260 12.40 3224 12.40 Beginning inventory Purchases: Mar-14 Jul-30 Oct-26 Total 17.40 22.40 27.40 420 340 420 460 160 1300 7308 7616 7308 10304 4384 25220 17.40 22.40 27. 40 17.40 22.40 27.40 120 160 280 2688 4384 0 1020 18148 7072 b) Periodic LIFO Ending Inventory Cost of goods Available for sale Cost of goods No of Cost per Available for units unit sale 260 12.40 3224 Cost of Goods sold No of Cost per cost of goods units unit sold 12.40 0 No of units Cost per unit Ending Inventory 260 12.40 3224 20 Beginning inventory Purchases: Mar-14 Jul-30 Oct-26 Total 4201 460 160 1300 17.40 22.40 27.40 7308 10304 4384 25220 348 0 400 460 160 1020 17.40 22.40 27.40 6960 10304 4384 21648 17.40 22.40 27.40 0 280/ 3572

LIFO C) Gross margin Sales revenue Less: Cost of goods sold Gross margin FIFO 43248 18148 25100 43248 21648 21600