Question

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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

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.

	a) Cost of Goods Sold using Specific Identification Available for Sale Cost of Goods Sold Ending Inventory Date Activity Units Unit Cost Units Sold Unit Cost COGS Ending Inventory Units Unit Cost Ending Inventory Cost Jan. 1 Beginning Inventory 200 Mar. 14 Purchase 350 July 30 Purchase 450 Oct. 26 Purchase 100 1,100 b) Gross Margin using Specific Identification Less: Equals:

Answer 1

a) Cost of Goods Sold using Specific Identification Available for Sale Cost of Goods Sold Ending Inventory Date Activity Units Unit Cost Units Sold Unit Cost COGS Ending Inventory Units Unit Cost Ending Inventory Cost Jan. 1 Beginning Inventory 200 10 200 10 2000 Mar. 14 Purchase 350 15 305 15 4575 45 15 675 July 30 Purchase 450 20 375 20 7500 75 20 1500 Oct. 26 Purchase 100 25 0 0 0 100 25 2500 1,100 880 14075 220 4675 b) Gross Margin using Specific Identification Sales 35200 Less: Cost of goods sold -14075 Equals: Gross profit 21125

a) Cost of Goods Sold using Specific Identification Available for Sale Cost of Goods Sold Ending Inventory Date Activity Units Unit Cost Units Sold Unit Cost COGS Ending Inventory Units Unit Cost Ending Inventory Cost Jan. 1 Beginning Inventory 200 Mar. 14 Purchase 350 July 30 Purchase 450 Oct. 26 Purchase 100 1,100 b) Gross Margin using Specific Identification Less: Equals: