[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. Assume that ending inventory is made up of 45 units from the March 14 purchase, 75 units from the July 30 purchase, and all 100 units from the October 26 purchase. Using the specific identification method, calculate the following.

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

a) Cost of Goods Sold using Specific Identification Available for Sale Cost of Goods Sold Ending Inventory Date Activity Units Unit Cost Units Sold Unit Cost COGS Ending Inventory Units Unit Cost Ending Inventory Cost Jan. 1 Beginning Inventory 200 10 200 10 2000 Mar. 14 Purchase 350 15 305 15 4575 45 15 675 July 30 Purchase 450 20 375 20 7500 75 20 1500 Oct. 26 Purchase 100 25 0 0 0 100 25 2500 1,100 880 14075 220 4675 b) Gross Margin using Specific Identification Sales 35200 Less: Cost of goods sold -14075 Equals: Gross profit 21125 a) Cost of Goods Sold using Specific Identification Available for Sale Cost of Goods Sold Ending Inventory Date Activity Units Unit Cost Units Sold Unit Cost COGS Ending Inventory Units Unit Cost Ending Inventory Cost Jan. 1 Beginning Inventory 200 Mar. 14 Purchase 350 July 30 Purchase 450 Oct. 26 Purchase 100 1,100 b) Gross Margin using Specific Identification Less: Equals:

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