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ew History Bookmarks People Window Help G arother word for owners witX Virginia Community Colege , x 1-Sylla D Connect Chapter 3 Homew × × ow/connect.html Help 0 Required information (The following information applies to the questions displayed Hemming Co. reported the following current-year purchases and sales for its only product Units Sold at Aetivities Units Acquired at Cost 200 units $10 2,000 350 units$15- 5,250 450 units ? S20. 9,000 100 units $25-2.500 Retail 150 units $40 300 units e $40 430 unitae $40 Jan. 1 Beginning inventory Jan.10 Sales Mar. 14 Purchase Mar.15 Sales uly30 Purchase Oct.5 Sales Oct. 26 Purchase Totala 1,100 unite 18,750 B8O unita 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 Compute the gross margin for FIFO method and LIFO method. this na C Prev 22 23 24 f 32 Next > 3 5 9

Solution

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 200 10 2000 10-Jan 150 10 1500 50 10 500 14-Mar 350 15 5250 50 10 500 350 15 5250 15-Mar 50 10 500 250 15 3750 100 15 1500 30-Jul 450 20 9000 100 15 1500 450 20 9000 5-Oct 100 15 1500 330 20 6600 120 20 2400 26-Oct 100 25 2500 120 20 2400 100 25 2500 Total Cost of goods sold 13850 Ending inventory 4900 *Cost assigned to ending inventory (2400+2500)              = 4900 *Total Cost of Goods Sold                                                     = 13850 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 200 10 2000 10-Jan 150 10 1500 50 10 500 14-Mar 350 15 5250 50 10 500 350 15 5250 15-Mar 300 15 4500 50 10 500 50 15 750 30-Jul 450 20 9000 50 10 500 50 15 750 450 20 9000 5-Oct 430 20 8600 50 10 500 50 15 750 20 20 400 26-Oct 100 25 2500 50 10 500 50 15 750 20 20 400 100 25 2500 Total Cost of goods sold 14600 Ending inventory 4150 *Cost assigned to ending inventory (500+750+400+2500)              = 4150 *Total Cost of Goods Sold = 14600 Ans.3 FIFO LIFO Sales Revenue 35200 35200 Less:Cost of goods sold 13850 14600 Gross Margin 21350 20600 *Calculation of sales revenue: Date Units Rate Amount Jan.10 150 40 6000 Mar.15 300 40 12000 Oct.5 430 40 17200 Total 880 35200