Exercise 6-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1

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.

Units Sold at Retail Units Acquired at Cost 245 units @ $11.80 = $ 2,891 190 units @ $41.80 390 units @ $16.80 = 6,552 Date Activities Jan. 1 Beginning inventory Jan.10 Sales Mar. 14 Purchase Mar.15 Sales July 30 Purchase Oct. 5 Sales Oct.26 Purchase Totals 350 units @ $41.80 445 units @ $21.80 = 9,701 430 units @ $41.80 = 145 units @ $26.80 1,225 units 3,886 $ 23,030 970 units Perpetual FIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per Cost of Goods unit Sold # of units Cost per unit Inventory Balance $ 2,891.00 January 1 ary 1 245 @ $ 11.80 = $ 11.80 = January 10 190 @ $ 11.80 = $2,242.00 March 14 390 @ $ 16.80 $ 11.80 390 @ $ 16.80 = 6,552.00 $ 6,552.00 March 15 $ 0 @ 0 @ I @ $ 11.80 $ 16.80 = = 0.00 0.00 July 30 445 @ $ 21.80 445 @ $ 21.80 = 9,701.00 $ 9,701.00 October 5 @ $ 21.80 = 0.00 $ 21.80 October 26 145 @ $26.80 @ @ $ 21.80 $26.80 = 145 3,886.00 Totals $2,242.00 $ 3,886.00 Perpetual LIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per Cost of Goods unit Sold Cost per unit $ 11.80 = Inventory Balance # of units 245 @ January 1 $ 2,891.00 January 10 March 14 March 15 July 30 October 5 October 26 Totals | $ 0.00 Compute the gross margin for FIFO method and LIFO method. FIFO: LIFO: Sales revenue Less: Cost of goods sold Gross margin