In: Accounting
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.
|
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 |