Question

Tree Seedlings has 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		210	units	@ $2	=	$	420
	Jan.	3		Sales									130	units	@ $8
	Feb.	14		Purchase		336	units	@ $3	=	$	1,008
	Feb.	15		Sales									230	units	@ $8
	June	30		Purchase		260	units	@ $4	=	$	1,040
	Nov.	6		Sales									188	units	@ $8
	Nov.	19		Purchase		88	units	@ $5	=	$	440
				Totals		894	units			$	2,908		548	units

Required:
The company uses a perpetual 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.

Answer 1