Question

In: Accounting

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


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

DateActivitiesUnits Acquired at CostUnits Sold at Retail

Jan.1
Beginning inventory
220units@ $10.80=$2,376





Jan.10
Sales







190units@ $40.80

Mar.14
Purchase
330units@ $15.80=
5,214





Mar.15
Sales







280units@ $40.80

July30
Purchase
420units@ $20.80=
8,736





Oct.5
Sales







390units@ $40.80

Oct.26
Purchase
120units@ $25.80=
3,096








Totals
1,090units

$19,422
860units


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.

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.

a) Periodic FIFOCost of Goods Available for SaleCost of Goods SoldEnding Inventory

# of unitsCost per unitCost of Goods Available for Sale# of units soldCost per unitCost of Goods Sold# of units in ending inventoryCost per unitEnding Inventory
Beginning inventorynot attemptednot attempted
not attempted

not attempted

Purchases:








March 14not attemptednot attempted
not attempted

not attempted

July 30not attemptednot attempted
not attempted

not attempted

October 26not attemptednot attempted
not attempted

not attempted

Total0
$00
$00
$0










b) Periodic LIFOCost of Goods Available for SaleCost of Goods SoldEnding Inventory

# of unitsCost per unitCost of Goods Available for Sale# of units soldCost per unitCost of Goods Sold# of units in ending inventoryCost per unitEnding Inventory
Beginning inventory


not attempted

not attempted

Purchases:








March 14


not attempted

not attempted

July 30


not attempted

not attempted

October 26


not attempted

not attempted

Total0
$00
$00
$0










c) Gross MarginFIFOLIFO
not attemptednot attemptednot attempted
not attemptednot attemptednot attempted

Solutions

Expert Solution

Cost of goods available for sale Cost of goods sold - Periodic FIFO Ending Inventory - Periodic FIFO
FIFO # of units    (A) Cost per unit Cost of goods available for sale # of units sold               (B) Cost per unit Cost of goods sold # of units in ending inventory      (A) - (B) Cost per unit Ending Inventory
Beginning Inventory            220 $    10.80 $       2,376            220 $    10.80 $    2,376 0 $    10.80 $0
Purchases:
Mar-14            330 $    15.80 $       5,214            330 $    15.80 $    5,214 0 $    15.80 $0
Jul-30            420 $    20.80 $       8,736            310 $    20.80 $    6,448            110 $    20.80 $    2,288
Oct-26            120 $    25.80 $       3,096 $    25.80 $           -              120 $    25.80 $    3,096
        1,090 $     19,422            860 $ 14,038            230 $    5,384
Cost of goods available for sale Cost of goods sold - Periodic LIFO Ending Inventory - Periodic LIFO
LIFO # of units    (A) Cost per unit Cost of goods available for sale # of units sold               (B) Cost per unit Cost of goods sold # of units in ending inventory      (A) - (B) Cost per unit Ending Inventory
Beginning Inventory            220 $    10.80 $       2,376 0 $    10.80 $0            220 $    10.80 $    2,376
Purchases:
Mar-14            330 $    15.80 $       5,214            320 $    15.80 $    5,056               10 $    15.80 $        158
Jul-30            420 $    20.80 $       8,736            420 $    20.80 $    8,736 0 $    20.80 $0
Oct-26            120 $    25.80 $       3,096            120 $    25.80 $    3,096 0 $    25.80 $0
        1,090 $     19,422            860 $ 13,792            230 $    2,534
Gross Margin = Sales Revenue - Cost of goods sold
Sales Revenue = 860 X $40.80 = $ 35,088
Under FIFO
Gross Margin = Sales Revenue - Cost of goods sold
= $ 35,088 - $ 14,038
= $ 21,050
Under LIFO
Gross Margin = Sales Revenue - Cost of goods sold
= $ 35,088 - $ 13,792
= $ 21,296

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