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Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. Perpetual...

Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
Perpetual FIFO:
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 1 290 @ $13.60 = $3,944.00
January 10 260 @ $13.60 = $3,536.00 30 @ $13.60 = $408.00
March 14 500 @ $18.60 30 @ $13.60 = $408.00
500 @ $18.60 = 9,300.00
$9,708.00
March 15 60 @ $13.60 = $816.00 0 @ $13.60 =
200 @ $18.60 = 3,720.00 300 @ $18.60 = $5,580.00
$4,536.00 $5,580.00
July 30 490 @ $23.60 0 @ $13.60
300 @ $18.60 = 5,580.00
490 @ $23.60 = 11,564.00
$17,144.00
October 5 0 @ $13.60 = $0.00 0 @ $13.60
190 @ $18.60 = 3,534.00 0 @ $18.60
300 @ $23.60 = 7,080.00 190 @ $23.60 = 4,484.00
$10,614.00 $4,484.00
October 26 190 @ $28.60 0 @ $13.60
0 @ $18.60
190 @ $23.60 = 4,484.00
190 @ $28.60 = 5,434.00
Totals $18,686.00 $9,918.00

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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 290 units @ $13.60 = $ 3,944
Jan. 10 Sales 260 units @ $43.60
Mar. 14 Purchase 500 units @ $18.60 = 9,300
Mar. 15 Sales 430 units @ $43.60
July 30 Purchase 490 units @ $23.60 = 11,564
Oct. 5 Sales 470 units @ $43.60
Oct. 26 Purchase 190 units @ $28.60 = 5,434
Totals 1,470 units $ 30,242 1,160 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.

Solutions

Expert Solution

Solution 1:

Computation of ending inventory and Issue cost under FIFO
Date Beginning Inventory Purchase Cost of goods sold Ending Inventory
Qty Rate Amount Qty Rate Amount Qty Rate Amount Qty Rate Amount
1-Jan 290 $13.60 $3,944.00 0 $0.00 $0.00 0 $0.00 $0.00 290 $13.60 $3,944.00
10-Jan 290 $13.60 $3,944.00 0 $0.00 $0.00 260 $13.60 $3,536.00 30 $13.60 $408.00
14-Mar 30 $13.60 $408.00 500 $18.60 $9,300.00 0 $0.00 $0.00 30 $13.60 $408.00
500 $18.60 $9,300.00
15-Mar 30 $13.60 $408.00 0 $0.00 $0.00 30 $13.60 $408.00 100 $18.60 $1,860.00
500 $18.60 $9,300.00 400 $18.60 $7,440.00
30-Jul 100 $18.60 $1,860.00 490 $23.60 $11,564.00 0 $0.00 $0.00 100 $18.60 $1,860.00
490 $23.60 $11,564.00
5-Oct 100 $18.60 $1,860.00 0 $0.00 $0.00 100 $18.60 $1,860.00 120 $23.60 $2,832.00
490 $23.60 $11,564.00 370 $23.60 $8,732.00
26-Oct 120 $23.60 $2,832.00 190 $28.60 $5,434.00 0 $0.00 $0.00 120 $23.60 $2,832.00
190 $28.60 $5,434.00
Total 1160 $21,976.00 310 $8,266.00

Solution 2:

Computation of ending inventory and Issue cost under LIFO
Date Beginning Inventory Purchase Cost of goods sold Ending Inventory
Qty Rate Amount Qty Rate Amount Qty Rate Amount Qty Rate Amount
1-Jan 290 $13.60 $3,944.00 0 $0.00 $0.00 0 $0.00 $0.00 290 $13.60 $3,944.00
10-Jan 290 $13.60 $3,944.00 0 $0.00 $0.00 260 $13.60 $3,536.00 30 $13.60 $408.00
14-Mar 30 $13.60 $408.00 500 $18.60 $9,300.00 0 $0.00 $0.00 30 $13.60 $408.00
500 $18.60 $9,300.00
15-Mar 30 $13.60 $408.00 0 $0.00 $0.00 430 $18.60 $7,998.00 30 $13.60 $408.00
500 $18.60 $9,300.00 70 $18.60 $1,302.00
30-Jul 30 $13.60 $408.00 490 $23.60 $11,564.00 0 $0.00 $0.00 30 $13.60 $408.00
70 $18.60 $1,302.00 70 $18.60 $1,302.00
490 $23.60 $11,564.00
5-Oct 30 $13.60 $408.00 0 $0.00 $0.00 470 $23.60 $11,092.00 30 $13.60 $408.00
70 $18.60 $1,302.00 70 $18.60 $1,302.00
490 $23.60 $11,564.00 20 $23.60 $472.00
26-Oct 30 $13.60 $408.00 190 $28.60 $5,434.00 0 $0.00 $0.00 30 $13.60 $408.00
70 $18.60 $1,302.00 70 $18.60 $1,302.00
20 $23.60 $472.00 20 $23.60 $472.00
190 $28.60 $5,434.00
Total 1160 $22,626.00 310 $7,616.00

Solution 3:

Computation of Gross Profit
Particulars FIFO LIFO
Sales $50,576 $50,576
Cost of goods sold $21,976 $22,626
Gross Profit (Sales - COGS) $28,600 $27,950

ekkarill92 answered 1 year ago
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