[The following information applies to the questions displayed below.] Hemming Co
ID: 2409520 • Letter: #
Question
[The following information applies to the questions displayed below.]
Hemming Co. reported the following current-year purchases and sales for its only product.
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.
Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 215 units @ $10.60 = $ 2,279 Jan. 10 Sales 180 units @ $40.60 Mar. 14 Purchase 320 units @ $15.60 = 4,992 Mar. 15 Sales 260 units @ $40.60 July 30 Purchase 415 units @ $20.60 = 8,549 Oct. 5 Sales 400 units @ $40.60 Oct. 26 Purchase 115 units @ $25.60 = 2,944 Totals 1,065 units $ 18,764 840 unitsExplanation / Answer
Answers
FIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
215
$ 10.60
$ 2,279.00
215
$ 10.60
$ 2,279.00
0
$ 10.60
$ -
Purchases:
14-Mar
320
$ 15.60
$ 4,992.00
320
$ 15.60
$ 4,992.00
0
$ 15.60
$ -
30-Jul
415
$ 20.60
$ 8,549.00
305
$ 20.60
$ 6,283.00
110
$ 20.60
$ 2,266.00
26-Oct
115
$ 25.60
$ 2,944.00
$ 25.60
$ -
115
$ 25.60
$ 2,944.00
$ -
$ -
$ -
0
$ -
$ -
TOTAL
1065
$ 18,764.00
840
$ 13,554.00
225
$ 5,210.00
Ending Inventory = 225 unit valued at $ 5,210
Cost of Goods Sold = 840 units of $ 13,554
LIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
215
$ 10.60
$ 2,279.00
$ 10.60
$ -
215
$ 10.60
$ 2,279.00
Purchases:
14-Mar
320
$ 15.60
$ 4,992.00
310
$ 15.60
$ 4,836.00
10
$ 15.60
$ 156.00
30-Jul
415
$ 20.60
$ 8,549.00
415
$ 20.60
$ 8,549.00
0
$ 20.60
$ -
26-Oct
115
$ 25.60
$ 2,944.00
115
$ 25.60
$ 2,944.00
0
$ 25.60
$ -
$ -
$ -
$ -
0
$ -
$ -
TOTAL
1065
$ 18,764.00
840
$ 16,329.00
225
$ 2,435.00
Ending Inventory = 225 unit valued at $ 2,435
Cost of Goods Sold = 840 units of $ 16,329
---Gross Margin as per FIFO
Sales
Units
Rate
Amount
Jan-10
180
$ 40.60
$ 7,308.00
Mar-15
260
$ 40.60
$ 10,556.00
Oct-05
400
$ 40.60
$ 16,240.00
Total
840
$ 34,104.00
(-) Cost of Goods Sold calculated in Requirement ‘a’
840
$ 13,554.00
Gross Margin
$ 20,550.00 [60.26%]
---Gross Margin as per LIFO
Sales
Units
Rate
Amount
Jan-10
180
$ 40.60
$ 7,308.00
Mar-15
260
$ 40.60
$ 10,556.00
Oct-05
400
$ 40.60
$ 16,240.00
Total
840
$ 34,104.00
(-) Cost of Goods Sold calculated in requirement ‘b’
840
$ 16,329.00
Gross Profit
$ 17,775.00 [52.12%]
FIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
215
$ 10.60
$ 2,279.00
215
$ 10.60
$ 2,279.00
0
$ 10.60
$ -
Purchases:
14-Mar
320
$ 15.60
$ 4,992.00
320
$ 15.60
$ 4,992.00
0
$ 15.60
$ -
30-Jul
415
$ 20.60
$ 8,549.00
305
$ 20.60
$ 6,283.00
110
$ 20.60
$ 2,266.00
26-Oct
115
$ 25.60
$ 2,944.00
$ 25.60
$ -
115
$ 25.60
$ 2,944.00
$ -
$ -
$ -
0
$ -
$ -
TOTAL
1065
$ 18,764.00
840
$ 13,554.00
225
$ 5,210.00
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