Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed belowj Hemming Co. reported the following current-year purchases and sales for its only product. Date Jan. 1 Beginning inventory Jan. 10 Sales Mar. 14 Purchase Mar.15 Sales July 30 Purchase Oct. 5 Sales Oct. 26 Purchase Units Sold at Retail 150 units $40 300 units $40 430 units $40 Activities Units Acquired at Cost 200 units $10-2,000 350 units $15 5,250 450 units$209,000 100 units $25 2,500 Totals 1,100 units $18,750 880 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

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Jan 1 balance 200 10 2000 200 10 2000 Purchasse 14-Mar 350 15 5250 350 15 5250 30-Jul 450 20 9000 330 20 6600 120 20 2400 Ooct 26 100 25 2500 100 25 2500 TOTAL 1100 18750 880 13850 220 4900 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Jan 1 balance 200 10 2000 200 10 2000 Purchasse 14-Mar 350 15 5250 330 15 4950 20 15 300 30-Jul 450 20 9000 450 20 9000 Ooct 26 100 25 2500 100 25 2500 TOTAL 1100 18750 880 16450 220 2300 GROSS PROFIT: FIFO LIFO Sales: 35200 35200 Cost of goods sold 13850 16450 Gross Profit 21350 18750

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