2 Required information Use the following information for the Exercises below. Th

Question

2 Required information Use the following information for the Exercises below. The following information applies to the questions displayed below.] Hemming Co. reported the following current-year purchases and sales for its only product 285 units $13.40 3,819 470 units $18.408,648 485 units 623.4011,349 185 units $28.405,254 Jan. 1 Beginning inventory Mar.14 Purchase Mar.15 Sales July30 Purchase Oct. 5 Sales Oct.26 Purchase 250 units 8 $43.40 400 units 8 $43.40 460 units 43.40 Totals 1,425 units 29,070 1,110 units Exercise 5-7 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

Explanation / Answer

Ans.1 Perpetual FIFO: Goods purchased Cost of Goods Sold Inventory Balance Date No. of units Cost per unit Total cost No. of units sold Cost per unit Total cost No. of units Cost per unit Inventory bal. 1-Jan 285 13.4 3819 10-Jan 250 13.4 3350 35 13.4 469 14-Mar 470 18.4 8648 35 13.4 469 470 18.4 8648 15-Mar 35 13.4 469 365 18.4 6716 105 18.4 1932 30-Jul 485 23.4 11349 105 18.4 1932 485 23.4 11349 5-Oct 105 18.4 1932 355 23.4 8307 130 23.4 3042 26-Oct 185 28.4 5254 130 23.4 3042 185 28.4 5254 Total Cost of Merch. Sold 20774 Ending inventory 8296 *Cost assigned to ending inventory (3042+5254)              = 8296 *Total Cost of Goods Sold                                                     = 20774 Ans.2 Perpetual LIFO: Goods purchased Cost of Goods Sold Inventory Balance Date No. of units Cost per unit Total cost No. of units sold Cost per unit Total cost No. of units Cost per unit Inventory bal. 1-Jan 285 13.4 3819 10-Jan 250 13.4 3350 35 13.4 469 14-Mar 470 18.4 8648 35 13.4 469 470 18.4 8648 15-Mar 400 18.4 7360 35 13.4 469 70 18.4 1288 30-Jul 485 23.4 11349 35 13.4 469 70 18.4 1288 485 23.4 11349 5-Oct 460 23.4 10764 35 13.4 469 70 18.4 1288 25 23.4 585 26-Oct 185 28.4 5254 35 13.4 469 70 18.4 1288 25 23.4 585 185 28.4 5254 Total Cost of Merch. Sold 21474 Ending inventory 7596 *Cost assigned to ending inventory (469+1288+585+5254) = 7596 *Total Cost of Goods Sold                                                                       = 21474 Ans.3 FIFO LIFO Sales Revenue 48174 48174 Less: Cost of goods sold 20774 21474 Gross Margin 27400 26700 *Calculation of sales revenue: Date Units Rate Amount Jan.10 250 43.4 10850 Mar.15 400 43.4 17360 Oct.5 460 43.4 19964 Total 1110 48174

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