[The following information applies to the questions displayed below.] Hemming Co

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 perpetual inventory system.
  
1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.

3. Compute the gross margin for FIFO method and LIFO method.

Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 200 units @ $10 = $ 2,000 Jan. 10 Sales 150 units @ $40 Mar. 14 Purchase 350 units @ $15 = 5,250 Mar. 15 Sales 300 units @ $40 July 30 Purchase 450 units @ $20 = 9,000 Oct. 5 Sales 430 units @ $40 Oct. 26 Purchase 100 units @ $25 = 2,500 Totals 1,100 units $ 18,750 880 units

Explanation / Answer

Cost of goods available for sale Cost of goods sold - Periodic FIFO Ending Inventory - Periodic FIFO FIFO # of units    (A) Cost per unit Cost of goods available for sale # of units sold               (B) Cost per unit Cost of goods sold # of units in ending inventory      (A) - (B) Cost per unit Ending Inventory Beginning Inventory            200 $    10.00 $       2,000            200 $    10.00 $    2,000 0 $    10.00 $0 Purchases: Mar-14            350 $    15.00 $       5,250            350 $    15.00 $    5,250 0 $    15.00 $0 Jul-30            450 $    20.00 $       9,000            330 $    20.00 $    6,600            120 $    20.00 $     2,400 Oct-26            100 $    25.00 $       2,500 $    25.00 $           -              100 $    25.00 $     2,500         1,100 $     18,750            880 $ 13,850            220 $     4,900 Cost of goods available for sale Cost of goods sold - Periodic LIFO Ending Inventory - Periodic LIFO LIFO # of units    (A) Cost per unit Cost of goods available for sale # of units sold               (B) Cost per unit Cost of goods sold # of units in ending inventory      (A) - (B) Cost per unit Ending Inventory Beginning Inventory            200 $    10.00 $       2,000 0 $    10.00 $0            200 $    10.00 $     2,000 Purchases: Mar-14            350 $    15.00 $       5,250            330 $    15.00 $    4,950               20 $    15.00 $         300 Jul-30            450 $    20.00 $       9,000            450 $    20.00 $    9,000 0 $    20.00 $0 Oct-26            100 $    25.00 $       2,500            100 $    25.00 $    2,500 0 $    25.00 $0         1,100 $     18,750            880 $ 13,950            220 $     2,300 Sales Revenue = 880 X $40 = $ 35,200 FIFO LIFO Sales $ 35,200 $ 35,200 Less: Cost of goods sold $ 13,850 $ 13,950 Gross margin $ 21,350 $ 21,250

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