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. Activities Units Sold at Retail 240 units$43.20 410 units $43.20 450 units $43.20 Units Acquired at Cost Date Jan. 1 Beginning inventory Jan. 10 Sales Mar. 14 Purchase Mar. 15 Sales July 30 Purchase Oct. 5 Sales Oct. 26 Purchase 280 units$13.20$3,696 460 units $18.208,372 480 units $23.20 -11,136 180 units $28.205,076 :03 Totals 1,400 units $28,280 1,100 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

a) and (b) Cost by FIFO and LIFO is

(c) Gross Margin

FIFO Date Explanation Units Unit Cost Cost Jan-01 Opening Inventory 280 13.20 3,696 Mar-14 Purchased Inventory 460 18.20 8,372 Jul-30 Purchased Inventory 480 23.20 11,136 Oct-26 Purchased Inventory 180 28.20 5,076 Cost of goods available for sale (a) 1,400 28,280 Cost of goods sold Jan-10 Opening Inventory sold 240 13.20 3,168 Mar-15 Opening Inventory sold 40 13.20 528 Goods pur on Mar 14 sold 370 18.20 6,734 Oct-05 Goods pur on Mar 14 sold 90 18.20 1,638 Goods pur on July 30 sold 360 23.20 8,352 Cost of goods sold (b) 1,100 20,420 Ending Inventory a-b 300 7,860 Goods pur on July 30 120 23.2 2784 Goods pur on Oct 26 180 28.2 5076 LIFO Date Explanation Units Unit Cost Cost Jan-01 Opening Inventory 280 13.20 3,696 Mar-14 Purchased Inventory 460 18.20 8,372 Jul-30 Purchased Inventory 480 23.20 11,136 Oct-26 Purchased Inventory 180 28.20 5,076 Cost of goods available for sale (a) 1,400 28,280 Cost of goods sold Jan-10 Opening Inventory sold 240 13.20 3,168 Mar-15 Goods pur on Mar 14 sold 410 18.20 7,462 Oct-05 Goods pur on July 30 sold 450 23.20 10,440 Cost of goods sold (b) 1,100 21,070 Ending Inventory a-b 300 7,210 Opening Inventory 40 13.2 528 Goods pur on Mar 14   50 18.2 910 Goods pur on July 30 30 23.2 696 Goods pur on Oct 26 180 28.2 5076

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