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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Hemming Co. reported the following current-year purchases and sales for its only product.
    

Date Activities Units Acquired at Cost Units Sold at Retail
  Jan. 1   Beginning inventory   250 units @ $12.00 = $ 3,000          
  Jan. 10   Sales                 200 units @ $42.00  
  Mar. 14   Purchase   400 units @ $17.00 =   6,800          
  Mar. 15   Sales                 360 units @ $42.00  
  July 30   Purchase   450 units @ $22.00 =   9,900          
  Oct. 5   Sales                 420 units @ $42.00  
  Oct. 26   Purchase   150 units @ $27.00 =   4,050          
        Totals   1,250 units     $ 23,750   980 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.

October 26
Totals
$ 8,400.00
< Required 1
Required 2 >
Transcribed Image Text:October 26 Totals $ 8,400.00 < Required 1 Required 2 >
Perpetual FIFO:
Goods Purchased
# of
Cost of Goods Sold
Inventory Balance
Cost per
unit
# of units
Cost per
unit
Cost of Goods
Cost per
Inventory
Balance
Date
# of units
units
sold
Sold
unit
January 1
250 @
$ 12.00 =
$
3,000.00
January 10
200 @
$ 42.00
$ 8,400.00
$ 12.00 =
March 14
March 15
July 30
October 5
October 26
Transcribed Image Text:Perpetual FIFO: Goods Purchased # of Cost of Goods Sold Inventory Balance Cost per unit # of units Cost per unit Cost of Goods Cost per Inventory Balance Date # of units units sold Sold unit January 1 250 @ $ 12.00 = $ 3,000.00 January 10 200 @ $ 42.00 $ 8,400.00 $ 12.00 = March 14 March 15 July 30 October 5 October 26
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