[The following information applies to the questions displayed belowj Hemming Co.
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Question
[The following information applies to the questions displayed belowj Hemming Co. reported the following current-year purchases and sales for its only product. Date Jan. 1 Beginning inventory Jan. 10 Sales Mar. 14 Purchase Mar. 15 Sales July 30 Purchase Oct. 5 Sales Oct. 26 Purchase Activities Units Acquired at Cost 200 units @ $10 = 2,000 350 units $155,250 450 units $209,000 100 units @ $25= 2.500 Units Sold at Retail 150 units $40 300 units $40 430 units $40 Totals 1,100 units $18,750 880 units Exercise 5-9A Periodic: Inventory costing system LO P3 Required Hemming uses a periodic 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 methoodExplanation / Answer
Answer
FIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
200
$ 10.00
$ 2,000.00
200
$ 10.00
$ 2,000.00
0
$ 10.00
$ -
Purchases:
14v Mar
350
$ 15.00
$ 5,250.00
350
$ 15.00
$ 5,250.00
0
$ 15.00
$ -
30-Jul
450
$ 20.00
$ 9,000.00
330
$ 20.00
$ 6,600.00
120
$ 20.00
$ 2,400.00
26-Oct
100
$ 25.00
$ 2,500.00
0
$ 25.00
$ -
100
$ 25.00
$ 2,500.00
TOTAL
1100
$ 18,750.00
880
$ 13,850.00
220
$ 4,900.00
LIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
200
$ 10.00
$ 2,000.00
$ 10.00
$ -
200
$ 10.00
$ 2,000.00
Purchases:
0
$ -
$ -
14v Mar
350
$ 15.00
$ 5,250.00
330
$ 15.00
$ 4,950.00
20
$ 15.00
$ 300.00
30-Jul
450
$ 20.00
$ 9,000.00
450
$ 20.00
$ 9,000.00
0
$ 20.00
$ -
26-Oct
100
$ 25.00
$ 2,500.00
100
$ 25.00
$ 2,500.00
0
$ 25.00
$ -
TOTAL
1100
$ 18,750.00
880
$ 16,450.00
220
$ 2,300.00
--Gross Profit by FIFO
Sales
Units
Rate
Amount
Jan-10
150
$ 40.00
$ 6,000.00
Mar-15
300
$ 40.00
$ 12,000.00
Oct-05
430
$ 40.00
$ 17,200.00
Total
880
$ 35,200.00
(-) Cost of Goods Sold
880
$ 13,850.00
Gross Profit
$ 21,350.00
---Gross Profit by LIFO
Sales
Units
Rate
Amount
Jan-10
150
$ 40.00
$ 6,000.00
Mar-15
300
$ 40.00
$ 12,000.00
Oct-05
430
$ 40.00
$ 17,200.00
Total
880
$ 35,200.00
Cost of Goods Sold
880
$ 16,450.00
Gross Profit
$ 18,750.00
FIFO
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
200
$ 10.00
$ 2,000.00
200
$ 10.00
$ 2,000.00
0
$ 10.00
$ -
Purchases:
14v Mar
350
$ 15.00
$ 5,250.00
350
$ 15.00
$ 5,250.00
0
$ 15.00
$ -
30-Jul
450
$ 20.00
$ 9,000.00
330
$ 20.00
$ 6,600.00
120
$ 20.00
$ 2,400.00
26-Oct
100
$ 25.00
$ 2,500.00
0
$ 25.00
$ -
100
$ 25.00
$ 2,500.00
TOTAL
1100
$ 18,750.00
880
$ 13,850.00
220
$ 4,900.00
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