Assume that ending inventory is made up of 45 units from the March 14 purchase, 75 units from the July 30 purchase: and all the units of the October 26 purchase. Using the specific identification method, calculate (a) the cost of goods sold and (b) the gross profit.

Exercise 17-3

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

Hemming uses a periodic inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Compute the gross profit for each method.

Date Activities Jan. I Beginning Inventory Sales .... Jan. 10 Mar. 14 Purchase Mar. 15 Sales.... July 30 Purchase Oct. 5 Sales Oct. 26 Purchase Totals Units Acquired at Cost 200 units @ $10 = $ 2,000 350 units @ $15 = 5,250 450 units @ $20 = 9,000 100 units @ $25 = 2,500 1,100 units $18,750 Units Sold at Retail 150 units @ $40 300 units @ $40 430 units @ $40 880 units