Hemming Co. reported the following current-year purchases and sales for its only

Question

Hemming Co. reported the following current-year purchases and sales for its only product.

    

Exercise 5-9A Periodic: Inventory costing system LO P3

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 230 units @ $11.20 = $ 2,576 Jan. 10 Sales 160 units @ $41.20 Mar. 14 Purchase 350 units @ $16.20 = 5,670 Mar. 15 Sales 320 units @ $41.20 July 30 Purchase 430 units @ $21.20 = 9,116 Oct. 5 Sales 400 units @ $41.20 Oct. 26 Purchase 130 units @ $26.20 = 3,406 Totals 1,140 units $ 20,768 880 units

Explanation / Answer

Answer =   CALCULATION OF COST OF ENDING INVENTORY AND COST OF GOODS SOLD UNDER FIFO METHOD PURCHASES/Op. Inventory COST OF GOODS SOLD CLOSING BALANCE Date Particulars Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Units (A) Rate Per unit   Total Cost Jan 01 Beginning inventory 230 $          11.20 $            2,576.00 Mar, 14 Purchases 350 $          16.20 $            5,670.00 July, 30 Purchases 430 $          21.20 $            9,116.00 Oct, 26 Purchases 130 $          26.20 $            3,406.00 Goods Available For Sale 1140 $         20,768.00 COGS as per FIFO Sales 230 $             11.20 $     2,576.00 Sales 350 $             16.20 $     5,670.00 Sales 300 $             21.20 $     6,360.00 130 $         21.20 $   2,756.00 130 $         26.20 $   3,406.00 880 $14,606 Total 880 14606 260 $   6,162.00 COGS Ending Inventory AS per the FIFO $        14,606.00 $    6,162.00 CALCULATION OF COST OF ENDING INVENTORY AND COST OF GOODS SOLD UNDER LIFO METHOD PURHASES COST OF GOODS SOLD CLOSING BALANCE Date Particulars Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Units (A) Rate Per unit   Total Cost Jan 01 Beginning inventory 230 $          11.20 $            2,576.00 Mar, 14 Purchases 350 $          16.20 $            5,670.00 July, 30 Purchases 430 $          21.20 $            9,116.00 Oct, 26 Purchases 130 $          26.20 $            3,406.00 Goods Available For Sale 1140 $         20,768.00 COGS as per FIFO Sales 320 $             16.20 $     5,184.00 Sales 430 $             21.20 $     9,116.00 Sales 130 $             26.20 $     3,406.00 880 $17,706 230 $         11.20 $   2,576.00 30 $         16.20 $      486.00 Total 880 17706 260 $   3,062.00 COGS Ending Inventory AS per the FIFO $        17,706.00 $    3,062.00 Particulara FIFO LIFO Jan, 10 Sales (160*41.20) $          6,592.00 $    6,592.00 Sales (320*41.20) $        13,184.00 $ 13,184.00 Sales (400*41.20) $        16,480.00 $ 16,480.00 Total Revenue $        36,256.00 $ 36,256.00 Less: Cost of Goods Sold $        14,606.00 $ 17,706.00 Gross Margin $        21,650.00 $ 18,550.00

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