hemming company reported the following current - year purchases and sales for its only product.\ndate\tactivi…

hemming company reported the following current - year purchases and sales for its only product.\ndate\tactivities\tunits acquired at cost\tunits sold at retail\njanuary 1\tbeginning inventory\t265 units @ $12.00 = $3,180\t \njanuary 10\tsales\t \t225 units @ $42.60\nmarch 14\tpurchase\t430 units @ $17.00 = $7,310\t \nmarch 15\tsales\t \t370 units @ $42.60\njuly 30\tpurchase\t465 units @ $22.00 = $10,230\t \noctober 5\tsales\t \t440 units @ $42.60\noctober 26\tpurchase\t165 units @ $27.00 = $4,455\t \ntotals\t \t1,325 units\t$25,170\t1,035 units\nexercise 5 - 8 (algo) periodic: inventory costing lo p1\nhemming uses a periodic inventory system.\n(a) determine the costs assigned to ending inventory and to cost of goods sold using fifo.\n(b) determine the costs assigned to ending inventory and to cost of goods sold using lifo.\n(c) compute the gross profit for each method.

hemming company reported the following current - year purchases and sales for its only product.\ndate\tactivities\tunits acquired at cost\tunits sold at retail\njanuary 1\tbeginning inventory\t265 units @ $12.00 = $3,180\t \njanuary 10\tsales\t \t225 units @ $42.60\nmarch 14\tpurchase\t430 units @ $17.00 = $7,310\t \nmarch 15\tsales\t \t370 units @ $42.60\njuly 30\tpurchase\t465 units @ $22.00 = $10,230\t \noctober 5\tsales\t \t440 units @ $42.60\noctober 26\tpurchase\t165 units @ $27.00 = $4,455\t \ntotals\t \t1,325 units\t$25,170\t1,035 units\nexercise 5 - 8 (algo) periodic: inventory costing lo p1\nhemming uses a periodic inventory system.\n(a) determine the costs assigned to ending inventory and to cost of goods sold using fifo.\n(b) determine the costs assigned to ending inventory and to cost of goods sold using lifo.\n(c) compute the gross profit for each method.

Answer

Explanation:

Step1: Calculate units available for sale and sold

Units available for sale = 265 + 430+465 + 165=1325 units. Units sold = 225+370 + 440=1035 units. Ending inventory units = 1325 - 1035 = 290 units.

Step2: FIFO (First - In, First - Out)

  • Cost of Goods Sold:
    • First, sell 265 units from beginning inventory at $12.00 per unit: 265×$12.00 = $3180.
    • Then, sell 430 units from March 14 purchase at $17.00 per unit: 430×$17.00 = $7310.
    • Then, sell 340 units from July 30 purchase at $22.00 per unit: 340×$22.00 = $7480.
    • Total cost of goods sold = $3180 + $7310+$7480=$17970.
  • Ending Inventory:
    • 125 units from July 30 purchase at $22.00 per unit: 125×$22.00 = $2750.
    • 165 units from October 26 purchase at $27.00 per unit: 165×$27.00 = $4455.
    • Total ending inventory = $2750 + $4455=$7205.

Step3: LIFO (Last - In, First - Out)

  • Cost of Goods Sold:
    • First, sell 165 units from October 26 purchase at $27.00 per unit: 165×$27.00 = $4455.
    • Then, sell 465 units from July 30 purchase at $22.00 per unit: 465×$22.00 = $10230.
    • Then, sell 405 units from March 14 purchase at $17.00 per unit: 405×$17.00 = $6885.
    • Total cost of goods sold = $4455 + $10230+$6885=$21570.
  • Ending Inventory:
    • 25 units from March 14 purchase at $17.00 per unit: 25×$17.00 = $425.
    • 265 units from beginning inventory at $12.00 per unit: 265×$12.00 = $3180.
    • Total ending inventory = $425 + $3180=$3605.

Step4: Calculate Gross Profit

  • Total sales revenue = (225 + 370+440)×$42.60 = 1035×$42.60 = $44091.
  • Gross Profit - FIFO: $44091−$17970 = $26121.
  • Gross Profit - LIFO: $44091−$21570 = $22521.

Answer:

(a) FIFO: Cost of Goods Sold = $17970, Ending Inventory = $7205 (b) LIFO: Cost of Goods Sold = $21570, Ending Inventory = $3605 (c) Gross Profit - FIFO: $26121, Gross Profit - LIFO: $22521