Question

ter 4, 5, and 6 Test Saved 4 01:41:33 Date 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. Activities Units Acquired at Cost Units sold at Retail Jan. 1 Beginning inventory 290 units @ $13.60 - $ 3,944 Jan. 10 Sales 260 units $43.60 Mar.14 Purchase 500 units $18.60 - 9,300 Mar. 15 Sales 430 units e $43.60 July 30 Purchase 490 units $23.60 - 11,564 Oct. 5 Sales 470 units @ $43.60 Oct.26 Purchase 90 units $28.60 - 5,434 Totals 1,470 units $30, 242 1,160 units 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. a) Periodic FIFO Cost of Goods Available for Sale Cost of Goods Sold Cost of Goods # of units Available for # of units Cost per Cost of unit Sale sold unit Goods Sold 290 $ 13.60 $ 3,944 290 $ 13.60 3.944 Cost per Ending Inventory # of units Cost in ending Ending Inventory per unit Inventory 0 Beginning inventory Purchases March 14 5

Answer 1

a) Periodic FIFO Cost of Goods Available for Sale Cost of Goods Sold Ending Inventory # of Units Cost per Unit Cost of Goods Available for Sale # of Units Cost per Unit Cost of Goods Sold # of Units in ending Inventory Cost per Unit Ending Inventory 290 $13.60 $3,944.00 290 $13.60 $3,944.00 Beginning Inventory Purchases: Mar-14 $18.60 $23.60 $28.60 500 370 $9,300.00 $11,564.00 $5,434.00 $18.60 $23.60 $9,300.00 $8,732.00 Jul-30 Oct-26 500 490 190 1470 120 $23.60 $28.60 190 $2,832.00 $5,434.00 $8,266.00 Total 1160 $21,976.00 310 Ending Inventory # of Units in Cost per Unit Ending Inventory ending Inventory 290 $13.60 $3,944.00 b) Periodic LIFO Cost of Goods Available for Sale Cost of Goods Sold Cost of Goods # of Units Cost per Unit # of Units Cost per Unit Cost of Goods Sold Available for Sale Beginning Inventory 290 $13.60 $3,944.00 Purchases: Mar-14) 500 $18.60 $9,300.00 480 $18.60 $8,928.00 Jul-30 490 $23.60 $11,564.00 490 $23.60 $11,564.00 Oct-26 190 $28.60 $5,434.00 190 Total 1470 $26,298.00 1160 $20,492.00 20 $18.60 $372.00 310 $4,316.00

c. Gross Margin Sales Less: Cost of Goods Sold Gross Margin FIFO LIFO $50,576.00 $50,576.00 ($21,976) ($20,492) $28,600 $30,084

Working Note:

# of Units Cost per Unit Sales Amount Sales Jan-10 260 $43.60 $11,336.00 Mar-15 430 $43.60 $18,748.00 Oct-10 470 $43.60 $20,492.00 Total 1160 $50,576.00

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give a thumbs up if you find this helpful.