Question

Use the following information for the Exercises below. [The following information applies to the questions displayed below.] 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 300 units @ $14.00 = $ 4,200 Jan. 10 Sales 250 units @ $44.00 Mar. 14 Purchase 520 units @ $19.00 = 9,880 Mar. 15 Sales 460 units @ $44.00 July 30 Purchase 500 units @ $24.00 = 12,000 Oct. 5 Sales 480 units @ $44.00 Oct. 26 Purchase 200 units @ $29.00 = 5,800 Totals 1,520 units $ 31,880 1,190 units Exercise 6-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1 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.

Answer 1

PERPETUAL FIFO
	Goods Purchased		COST OF GOODS SOLD			INVENTORY BALANCE
Date	# of units	Cost per unit	# of units Sold	Cost per unit		# of units Sold	Cost per unit
Jan-01						300.00	14.00	4,200.00
Jan-10	-		250.00	14.00	3,500.00	50.00	14.00	700.00
Mar-14	520.00	19.00				50.00	14.00	700.00
						520.00	19.00	9,880.00
Mar-15			50.00	14.00	700.00	110.00	19.00	2,090.00
			410.00	19.00	7,790.00
Jul-30	500.00	24.00				110.00	19.00	2,090.00
						500.00	24.00	12,000.00
Oct-05			110.00	19.00	2,090.00	130.00	24.00	3,120.00
			370.00	24.00	8,880.00
Oct-26	200.00	29.00				130.00	24.00	3,120.00
						200.00	29.00	5,800.00
					$ 22,960.00			8,920.00

2)

PERPETUAL LIFO
	Goods Purchased		COST OF GOODS SOLD			INVENTORY BALANCE
Date	# of units	Cost per unit	# of units Sold	Cost per unit		# of units Sold	Cost per unit
Jan-01						300.00	14.00	4,200.00
Jan-10	-		250.00	14.00	3,500.00	50.00	14.00	700.00
Mar-14	520.00	19.00				50.00	14.00	700.00
						520.00	19.00	9,880.00
Mar-15			460.00	19.00	8,740.00	50.00	14.00	700.00
						60.00	19.00	1,140.00
						50.00	14.00	700.00
Jul-30	500.00	24.00				60.00	19.00	1,140.00
						500.00	24.00	12,000.00
Oct-05			480.00	24.00	11,520.00	50.00	14.00	700.00
						60.00	19.00	1,140.00
						20.00	24.00	480.00
Oct-26	200.00	29.00				50.00	14.00	700.00
						60.00	19.00	1,140.00
						20.00	24.00	480.00
						200.00	29.00	5,800.00
					$ 23,760.00			8,120.00

3)

	FIFO	LIFO
Sales Revenue	$ 52,360.00	$ 52,360.00
Cost of Goods Sold	$ 22,960.00	$ 23,760.00
Gross Profit	$ 29,400.00	$ 28,600.00