ts sold at Retail 215 units $42.40 380 units $42.40 425 units e $42.40 Activitie

Question

ts sold at Retail 215 units $42.40 380 units $42.40 425 units e $42.40 Activities Units Acquired at Cost Jan. 1 Beginning inventory Jan.10 Sales Mar.14 Purchase Mar.15 Sales July30 Purchase Oct. 5 Sales Oct. 26 Purchase 260 units $12.40 3,224 420 units $17.40-7,308 460 units $22.4010,304 160 units$27.404,384 Totals 1,300 units $25,220 1,020 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. Cost of Goods Sold Ending Inventory Cost of Goods Available for Sale a) Periodic FIFO Cost of Goods | # of units | Cost per Goods | Cost of | # of units | Cost per Cost per Available for sold Sale unit inventoryer unit Inventory dunit Goods Sold in endingCost Ending 260 12.40 3,224 3,224 7,308 10,304 4,384 Beginning inventory Purchases: 260 $ 12.40 420 S 17.40 7,308 March 14 July 30 October 26 420 $17.40 460$22.40 160 $27.40 160 $27.40 4,384

Explanation / Answer

a Periodic FIFO Cost of Goods Available for Sale Cost of Goods Sold Ending Inventory No of units Cost per unit Cost of Goods available for sale No of units Cost per unit Cost of Goods sold No of units in ending inventory Cost per unit Ending Inventory Beginning inventory 260 $12.40 $3,224.00 260 $12.40 $3,224.00 0 0 Purchases : 14-Mar 420 $17.40 $7,308.00 420 $17.40 $7,308.00 0 30-Jul 460 $22.40 $10,304.00 340 $22.40 $7,616.00 120 $22.40 2688 26-Oct 160 $27.40 $4,384.00 160 $27.40 4384 Total 1300 25220 1020 $18,148.00 280 $7,072.00 Gross Margin Sales (1020*42.40) 43248 Less : Cost of goods sold $18,184 Gross Margin $25,064 b Periodic LIFO Cost of Goods Available for Sale Cost of Goods Sold Ending Inventory No of units Cost per unit Cost of Goods available for sale No of units Cost per unit Cost of Goods sold No of units in ending inventory Cost per unit Ending Inventory Beginning inventory 260 $12.40 $3,224.00 215 $12.40 $2,666.00 45 $12.40 558 Purchases : 14-Mar 420 $17.40 $7,308.00 380 $17.40 $6,612.00 40 $17.40 696 30-Jul 460 $22.40 $10,304.00 425 $22.40 $9,520.00 35 $22.40 784 26-Oct 160 $27.40 $4,384.00 160 $27.40 4384 Total 1300 25220 1020 $18,798.00 280 $6,422.00 Gross Margin Sales (1020*42.40) 43248 Less : Cost of goods sold $18,798 Gross Margin $24,450

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