Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below Hemming Co. reported the following current-year purchases and sales for its only product Units Acquired at Cost Units Sold at Retail 285 unitse $13.40- 3,819 470 units $18.408,648 485 units@ $23.40 11,349 185 units@ $28.40# 5,254 Date Activities Jan. 1 Beginning Jan.10 Sales Mar.14 Purchase Mar.15 Sales July30 Purchase Oct. 5 Sales Oct.26 Purchase inventory 250 units $43.48 400 units@ $43.40 460 unitse $43.40 Totals 1,425 units $29,070 1,110 units Required: Hemming uses a perpetual inventory system. 0 1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. 2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. Next > Prev 1 2 3 of 11

Explanation / Answer

1. Ending inventory and cost of goods sold using FIFO:

Date

Purchases

Sale

Balance

Jan. 1

Beginning inventory

285 units @13.40 = $3819

Jan.10

250 units @13.40 = $3350

35 units @13.40 = $469

March.14

470 units @18.40 = $8648

35 units @13.40 = $469

470 units @18.40 = $8648

March.15

35 units @13.40 = $469

365 units @18.40 = $6716

105 units @18.40 = $1932

July 30

485 units @23.40 = $11349

105 units @18.40 = $1932

485 units @23.40 = $11349

Oct. 5

105 units @18.40 = $1932

355 units @23.40 = $8307

130 units @23.40 = $3042

Oct. 26

185 units @28.40 = $5254

130 units @23.40 = $3042

185 units @28.40 = $5254

Cost of goods sold ($3350 + $469 + $6716 + $1932 + $8307) = $20774

Ending inventory ($3042 + $5254) = $8296

2. Ending inventory and cost of goods sold using LIFO:

Date

Purchases

Sale

Balance

Jan. 1

Beginning inventory

285 units @13.40 = $3819

Jan.10

250 units @13.40 = $3350

35 units @13.40 = $469

March.14

470 units @18.40 = $8648

35 units @13.40 = $469

470 units @18.40 = $8648

March.15

400 units @18.40 = $7360

35 units @13.40 = $469

70 units @18.40 = $1288

July 30

485 units @23.40 = $11349

35 units @13.40 = $469

70 units @18.40 = $1288

485 units @23.40 = $11349

Oct. 5

460 units @23.40 = $10764

35 units @13.40 = $469

70 units @18.40 = $1288

25 units @23.40 = $585

Oct. 26

185 units @28.40 = $5254

35 units @13.40 = $469

70 units @18.40 = $1288

25 units @23.40 = $585

185 units @28.40 = $5254

Cost of goods sold ($3350 + $7360 + $10764) = $21474

Ending inventory ($469 + $1288 + $585 + $5254) = $7596

3. Gross margin for FIFO method and LIFO method;

FIFO

LIFO

Sales revenue

$48174

$48174

Less: Cost of goods sold

$20774

$21474

Gross margin

$27400

$26700

Working note;

Sales revenue is calculated as follow;

Total units sold = 1110 units

Rate of sale = $43.40

Thus sales revenue (1110 * $43.40) = $48174

Date

Purchases

Sale

Balance

Jan. 1

Beginning inventory

285 units @13.40 = $3819

Jan.10

250 units @13.40 = $3350

35 units @13.40 = $469

March.14

470 units @18.40 = $8648

35 units @13.40 = $469

470 units @18.40 = $8648

March.15

35 units @13.40 = $469

365 units @18.40 = $6716

105 units @18.40 = $1932

July 30

485 units @23.40 = $11349

105 units @18.40 = $1932

485 units @23.40 = $11349

Oct. 5

105 units @18.40 = $1932

355 units @23.40 = $8307

130 units @23.40 = $3042

Oct. 26

185 units @28.40 = $5254

130 units @23.40 = $3042

185 units @28.40 = $5254

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