Hemming Co. reported the following current-year purchases and sales for its only product. Units Sold at Retail Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Units Acquired at Cost 215 units @ $10.60 = $ 2,279 180 units @ $40.60 Mar. 14 Purchase 320 units @ $15.60 4,992 Mar. 15 Sales 260 units @ $40.60 415 units @ $20.60 = 8,549 July 30 Purchase Oct. 5 Sales 400 units @ $40.60 Oct. 26 Purchase 115 units @ $25.60 2,944 Totals 1,065 units $18,764 840 units 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. Required 1 Required 2 Required 3 Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. 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 Inventory Balance Cost per unit $ 10.60 January 1 215 @ = $ 2,279.00 January 10 180 > @) $ 40.60 > = $ 7,308.00 35 @ Il S 371.00 10.60 March 14 320 > @ $ 15.60 > 35 $ 371.00 >> @ @ 10.60 $ 15.60 320 4,992.00 $ 5,363.00 March 15 35 > $ 10.60 = $ 371.00 95 > = $ 1,007.00 TU @ @ $ 10.60 $ 15.60 225 > @ = 3,510.00 15.60 = $ 3,881.00 $ 1,007.00 July 30 415 > @ 20.60 10.60 95 1,482.00 15.60 $ 20.60 415 @ = 8,549.00 $ 10,031.00 October 5 $ $ 0.00 10.60 $ 10.60 $ 15.60 95 @ II 1,482.00 110 @ 15.60 1,716.00 . 305 @ = 20.60 6,283.00 @ 20.60 $ 7,765.00 $ 1,716.00 October 26 115 $ 25.60 @ @ 10.60 $ 15.60 $ 20.60 $ 25.60 110 @ 50 - 2,266.00 115 @ 2,944.00 Totals $ 18,954.00 $ 5,210.00 Required 1 Required 2 Required 3 Compute the gross margin for FIFO method and LIFO method. Sales revenue Less: Cost of goods sold Gross margin FIFO LIFO $ 33,996 $ 33,996 > 13,554 13,554 X $ 20,442 $ 20,442 Required 1 Required 2 Required 3 Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. Perpetual LIFO: 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 Inventory Balance Cost per unit $ $ 10.60 January 1 215 $ 2,279.00 January 10 180 @ $ 40.00 x = $ 7,200.00 35@ $ 10.60 $ 371.00 March 14 320 @ $ 15.60 35 @ $ 371.00 $ 10.60 $ 15.60 320 @ 4,992.00 $ 5,363.00 March 15 260 X @ = $ 2,756.00 35 @ S 371.00 $ 10.60 $ 15.60 $ 10.60 $ 15.60 @ = 0.00 60 @ 936.00 $ 2,756.00 $ 1,307.00 July 30 415 @ $ 20.60 35 @ $ 371.00 60 @ $ 10.60 $ 15.60 $ 20.60 936.00 415 8,549.00 $ 9,856.00 October 5 400 X @ = $ 4,240.00 60 X @ = $ 636.00 @ $ 10.60 $ 15.60 $ 20.60 0.00 15 Xl @ $ 10.60 $ 15.60 $ 20.60 234.00 @ 0.00 15 @ 309.00 $ 4,240.00 $ 1,179.00 $ October 26 115@ $ 25.60 15 X @ S 159.00 10.60 15 X @ $ 15.60 234.00 15 @ 309.00 20.60 $ 25.60 115 @ 2,944.00 Totals $ 14,196.00 $ 3,646.00
