Question

Exercise 5-8 Specific identification LO P1

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

200

units

@ $10

=

$

2,000

Jan.

10

Sales

150

units

@ $40

Mar.

14

Purchase

350

units

@ $15

=

5,250

Mar.

15

Sales

300

units

@ $40

July

30

Purchase

450

units

@ $20

=

9,000

Oct.

5

Sales

430

units

@ $40

Oct.

26

Purchase

100

units

@ $25

=

2,500

Totals

1,100

units

$

18,750

880

units

Required:

Hemming uses a perpetual inventory system. Assume that ending inventory is made up of 45 units from the March 14 purchase, 75 units from the July 30 purchase, and all 100 units from the October 26 purchase. Using the specific identification method, calculate the following.

Answer 1

Computation of cost of goods sold :
Specific identification method :
	Goods purchased			Cost of goods sold			Inventory Balance
Date	No of units	Cost per unit	Amount	No of units	Cost per unit	Amount	No of units	Cost per unit	Amount
Jan-18							200	10	2000
10-Jan				150	10	1500	50	10	500
14-Mar	350	15	5250				50	10	500
							350	15	5250
15-Mar				50	10	500	0	10	0
				250	15	3750	100	15	1500
30-Jul	450	20	9000				0	10	0
							100	15	1500
							450	20	9000
05-Oct				55	15	825	45	15	675
				375	20	7500	75	20	1500
26-Oct	100	25	2500				45	15	675
							75	20	1500
							100	25	2500
				880		14075	220		4675
Cost of goods sold				Ending inventory
880 units		14075		220		4675
Gross profit :
Sale value	35200
Less : cost of goods sold	-14075
Gross profit	21125