Question

Hemming Co. reported the following current-year purchases and sales for its only product.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

280

units

@ $13.20

=

$

3,696

Jan.

10

Sales

240

units

@ $43.20

Mar.

14

Purchase

460

units

@ $18.20

=

8,372

Mar.

15

Sales

410

units

@ $43.20

July

30

Purchase

480

units

@ $23.20

=

11,136

Oct.

5

Sales

450

units

@ $43.20

Oct.

26

Purchase

180

units

@ $28.20

=

5,076

Totals

1,400

units

$

28,280

1,100

units

Required:
Hemming uses a perpetual inventory system.
  
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.
3. Compute the gross margin for FIFO method and LIFO method.

	Perpetual LIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance January 1 280 @ $13.20 = $3,696.00 January 10 March 14 March 15 July 30 October 5 October 26 Totals $0.00

Answer 1

FIFO - Perpectual
	Goods Purchased			Cost of Good Sold			Inventory Balance
Date	# of Units	Cost per Unit	Purchase Total Cost	# of Unit Sold	Cost per Unit	Cost of Good Sold	# of Units	Cost per Unit	Inventory Total Cost
Jan-01							280	$13.20	$3,696.00
Jan-10				240	$13.20	$3,168.00	40	$13.20	$528.00
Mar-14	460	18.2	$8,372.00				40	$13.20	$528.00
							460	$18.20	$8,372.00
Mar-15				40	$13.20	$528.00	90	$18.20	$1,638.00
				370	$18.20	$6,734.00
Jul-30	480	23.2	$11,136.00				90	$18.20	$1,638.00
							480	$23.20	$11,136.00
Oct-05				90	$18.20	$1,638.00	120	$23.20	$2,784.00
				360	$23.20	$8,352.00
Oct-26	180	28.2	$5,076.00				120	$23.20	$2,784.00
							180	$28.20	$5,076.00
total	1120		$24,584.00	1100		$20,420.00	300		$7,860.00

LIFO - Perpectual
	Goods Purchased			Cost of Good Sold			Inventory Balance
Date	# of Units	Cost per Unit	Purchase Total Cost	# of Unit Sold	Cost per Unit	Cost of Good Sold	# of Units	Cost per Unit	Inventory Total Cost
Jan-01							280	$13.20	$3,696.00
Jan-10				240	$13.20	$3,168.00	40	$13.20	$528.00
Mar-14	460	18.2	$8,372.00				40	$13.20	$528.00
							460	$18.20	$8,372.00
Mar-15				410	$18.20	$7,462.00	40	$13.20	$528.00
							50	$18.20	$910.00
Jul-30	480	23.2	$11,136.00				40	$13.20	$528.00
							50	$18.20	$910.00
							480	$23.20	$11,136.00
Oct-05				450	$23.20	$10,440.00	40	$13.20	$528.00
							50	$18.20	$910.00
							30	$23.20	$696.00
Oct-26	180	28.2	$5,076.00				40	$13.20	$528.00
							50	$18.20	$910.00
							30	$23.20	$696.00
							180	$28.20	$5,076.00
total	1120		$24,584.00	1100		$21,070.00	300		$7,210.00

Computtion of Gross Margin as per LIFO & FIFO
	FIFO	LIFO
Sales	$28,280.00	$28,280.00
Cost of Goods Sold	$20,420.00	$21,070.00
Gross Margin	$7,860.00	$7,210.00