Question

[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

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

3. Compute the gross margin for FIFO method and LIFO method.

Required 1

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 1 200 @ $10.00 = $2,000.00 January 10 150 @ $10.00 = $1,500.00 50 @ $10.00 = $500.00 March 14 350 @ $15.00 50 @ $10.00 = $500.00 350 @ $15.00 = 5,250.00 $5,750.00 March 15 50 @ $10.00 = $500.00 0 @ $10.00 = 250 @ $15.00 = 3,750.00 100 @ $15.00 = $1,500.00 $4,250.00 $1,500.00 July 30 October 5 October 26 Totals $5,750.00

Requirement 3
	FIFO: LIFO: Sales revenue Less: Cost of goods sold Gross margin

Answer 1

	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	200	$    10.00	$       2,000	200	$    10.00	$    2,000	0	$    10.00	$0
Purchases:
Mar-14	350	$    15.00	$       5,250	350	$    15.00	$    5,250	0	$    15.00	$0
Jul-30	450	$    20.00	$       9,000	330	$    20.00	$    6,600	120	$    20.00	$     2,400
Oct-26	100	$    25.00	$       2,500		$    25.00	$           -	100	$    25.00	$     2,500
	1,100		$     18,750	880		$ 13,850	220		$     4,900
	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	200	$    10.00	$       2,000	0	$    10.00	$0	200	$    10.00	$     2,000
Purchases:
Mar-14	350	$    15.00	$       5,250	330	$    15.00	$    4,950	20	$    15.00	$         300
Jul-30	450	$    20.00	$       9,000	450	$    20.00	$    9,000	0	$    20.00	$0
Oct-26	100	$    25.00	$       2,500	100	$    25.00	$    2,500	0	$    25.00	$0
	1,100		$     18,750	880		$ 13,950	220		$     2,300
Sales Revenue	=	880 X $40	=	$ 35,200
	FIFO	LIFO
Sales	$ 35,200	$ 35,200
Less: Cost of goods sold	$ 13,850	$ 13,950
Gross margin	$ 21,350	$ 21,250