Concept explainers
Perpetual: Inventors- costing methods—FIFO and LIFO£1
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........ | 200 units@ $10 = $ 2,000 | |
Jan. | 10 | Sales..................... | 150 units@ $40 | |
Mar | 14 | Purchase................. | 350 units @ $15 = 5,250 | |
Mar | 15 | Sales..................... | 300 units @ $40 | |
July | 30 | Purchase................. | 450 units @ $20 = 9,000 | |
Oct | 5 | Sales..................... | 430 units @ $40 | |
Oct. | 26 | Purchase................. | 100 units @ $25 = 2,500 | |
Totals.................... | 1,100 units $18,750 | 880 units |
Required
Hemming uses a perpetual inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Compute the gross margin for each method. (Round amounts to cents.)
Check Ending inventory: LIFO, $4,150
Calculate the cost assigned to ending inventory, when costs are assigned based on the FIFO and LIFO method.
Explanation of Solution
PERPERTUAL INVENTORY - FIFO METHOD | |||||||||
Date | Goods Purchased | Cost of Goods sold | Inventory Balance | ||||||
Units | Per unit | Amount | Units | Per unit | Amount | Units | Per unit | Amount | |
1-Jan | 200 | $10 | $2,000 | ||||||
10-Jan | 150 | $10 | $1,500 | 50 | $10 | $500 | |||
14-Mar | 350 | $15 | $5,250 | 50 | $10 | $500 | |||
350 | $15 | $5,250 | |||||||
400 | $5,750 | ||||||||
15-Mar | 50 | $10 | $500 | ||||||
250 | $15 | $3,750 | 100 | $15 | $1,500 | ||||
30-Jul | 450 | $20 | $9,000 | 100 | $15 | $1,500 | |||
450 | $20 | $9,000 | |||||||
550 | $10,500 | ||||||||
5-Oct | 100 | $15 | $1,500 | ||||||
330 | $20 | $6,600 | 120 | $20 | $2,400 | ||||
26-Oct | 100 | $25 | $2,500 | 120 | $20 | $2,400 | |||
100 | $25 | $2,500 | |||||||
220 | $4,900 |
Table (1)
Therefore, cost assigned to ending inventory for Perpetual FIFO method amount is $4,900.
PERPERTUAL INVENTORY - LIFO METHOD | |||||||||
Date | Goods Purchased | Cost of Goods sold | Inventory Balance | ||||||
Units | Per unit | Amount | Units | Per unit | Amount | Units | Per unit | Amount | |
1-Jan | 200 | $10 | $2,000 | ||||||
10-Jan | 150 | $10 | $1,500 | 50 | $10 | $500 | |||
14-Mar | 350 | $15 | $5,250 | 50 | $10 | $500 | |||
350 | $15 | $5,250 | |||||||
400 | $5,750 | ||||||||
15-Mar | 300 | $150 | $45,000 | 50 | $10 | $500 | |||
50 | $15 | $750 | |||||||
100 | $1,250 | ||||||||
30-Jul | 450 | $20 | $9,000 | 50 | $10 | $500 | |||
50 | $15 | $750 | |||||||
450 | $20 | $9,000 | |||||||
550 | $10,250 | ||||||||
5-Oct | 430 | $20 | $8,600 | 50 | $10 | $500 | |||
50 | $15 | $750 | |||||||
20 | $20 | $400 | |||||||
100 | $25 | $2,500 | |||||||
220 | $4,150 |
Table (2)
Therefore, cost assigned to ending inventory for Perpetual FIFO method amount is $4,150.
Calculate gross profit.
Particulars | FIFO | LIFO |
Amount | Amount | |
Sales (880 units ×$40 ) | $35,200 | $35,200 |
Less: Cost of goods sold | $13,850 | $16,450 |
Gross margin | $21,350 | $18,750 |
Table (3)
Want to see more full solutions like this?
Chapter 6 Solutions
Principles of Financial Accounting.
- Homework i s Date January 1 January 10 March 14 March 15 July 30 October 5 October 26. Date Required information [The following information applies to the questions displayed below.] Hemming Company reported the following current-year purchases and sales for its only product. Units Acquired at Cost @$13.20 = @$18.20 = @$23.20 = @$28.20 Activities Beginning inventory Sales Purchase Sales Purchase. Sales Purchase. Totals a) Cost of Goods Sold using Specific Identification Available for Sale Activity Saved # of units 8,372 11,136 5,076 $28,280 Cost of Goods Sold Cost Per Unit Hemming uses a periodic inventory system. Ending inventory consists of 40 units from the March 14 purchase, 80 units from the July 30 purchase, and all 180 units from the October 26 purchase. Using the specific identification method, calculate the following. Help COGS Save & Exit Subre Units Sold at Retail 240 units 410 units 450 units 1,100 units Check my work Ending Inventory Units @ $43.20 @$43.20 @$43.20 Ending…arrow_forwardJasper & Williams made purchases of a particular product In the current year as follows: 1 Beginning inventory Jan. 120 units O$2.10 @$2.20 @$2.30 @$2.45 = $ 252 Mar. 7 Purchased 250 units 550 July 28 Purchased 5ee units 1,150 Ooct. Purchased 60 units 147 Totals 930 units $ 2,099 Assume that the specific Identification method is used to assign costs to cost of goods sold ending inventory. The units In ending Inventory were specifically identified as follows. • 80 units from beginning Inventory • 27 units from the March 7 purchase, and • 48 units from the July 28 purchase. Requlred: Determine the cost to be assigned to ending Inventory and cost of goods sold. (Round the final answers to 2 decimal places.) Ending inventory Cost of goods soldarrow_forwardower-of-Cost-or-Market Stalberg Company's beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: Units Unit Price Total Cost Jan. 1 Beginning inventory 10 $20 $200 Mar. 5 1st purchase 10 22 220 Sept. 9 2nd purchase 10 25 250 Dec. 8 3rd purchase 10 30 300 40 $970 There are 10 units of inventory on hand on December 31. Question Content Area 1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods: a. FIFO$fill in the blank afc0e7fdc02f065_1 b. Weighted-average (round calculations to two decimal places.)$fill in the blank afc0e7fdc02f065_2 2. Assume that the market price per unit (cost to replace) of Stalberg's inventory on December 31, 20--, was $26. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: a. FIFO…arrow_forward
- HUUW OL UE enu UI e aun aLUu U eUu, LELem aL Unit Cost $ 45 Transactions Units Beginning inventory, January 1 Transactions during the year: a. Purchase, January 30 b. Sale, March 14 ($100 each) c. Purchase, May 1 d. Sale, August 31 (S160 each) 1, 600 2, 300 (1, 250) 1,000 (1,500) 49 75 Assuming that for Specific identification method (item id) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: a. Last-in, first-out b. Weighted average cost. c First-in, first-out. d. Specific identification, assuming that the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30, Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the…arrow_forwardCost Flow Methods The following three identical units of Item Alpha are purchased during April: Item Alpha Units Cost Apr. Purchase $76 14 Purchase 1 81 28 Purchase 1 83 Total 3 $240 $80 ($240 ÷ 3 units) Average cost per unit Assume that one unit is sold on April 30 for $132. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, firs and (c) weighted average cost methods. Gross Profit Ending Inventory $4 a. First-in, first-out (FIFO) b. Last-in, first-out (LIFO) c. Weighted average costarrow_forward1.1 Complete the table provided using the weighted average cost (AVCO) method (with the weighted (4 marks) average cost per unit expressed to the nearest cent). INFORMATION Purchases Issues Balance Date Quantity Price Amount Quantity Price Amount Quantity Price Amount TRANSACTIONS The following transactions of Sinotec Manufacturers (that uses the perpetual inventory system) took place during April 2021 in respect of a component used in production: April Transactions 01 Opening inventory 50 units @ R20 per unit 06 Issued to production 30 units 16 Purchased from a supplier 170 units @ R22 per unit 20 Returned to the supplier (See purchase on 16th) 100 units 21 Issued to production 80 unitsarrow_forward
- Cost Flow Methods The following three identical units of Item JC07 are purchased during April: Item Beta Units Cost April 2 Purchase 1 $177 April 15 Purchase 1 179 April 20 Purchase 1 181 Total 3 $537 Average cost per unit $179 ($537 ÷ 3 units) Assume that one unit is sold on April 27 for $234. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost method. Gross Profit Ending Inventory a. First-in, first-out (FIFO) $fill in the blank 1 $fill in the blank 2 b. Last-in, first-out (LIFO) $fill in the blank 3 $fill in the blank 4 c. Weighted average cost $fill in the blank 5 $fill in the blank 6arrow_forwardCost Flow Methods The following three identical units of Item Alpha are purchased during April: Item Alpha Units Cost Apr. 2 Purchase 1 $213 14 Purchase 1 215 28 Purchase 1 217 Total 3 $645 Average cost per unit $215 ($645 ÷ 3 units) Assume that one unit is sold on April 30 for $290. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost methods. Gross Profit Ending Inventory a. First-in, first-out (FIFO) 213 b. Last-in, first-out (LIFO) 217 X c. Weighted average cost $arrow_forwardCost Flow Methods The following three identical units of Item Alpha are purchased during April: Item Alpha Units Cost Apr. 2 Purchase 1 $145 14 Purchase 1 149 28 Purchase 1 153 Total 3 $447 Average cost per unit $149 ($4473 units) Assume that one unit is sold on April 30 for $215. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost methods. Gross Profit Ending Inventory a. First-in, first-out (FIFO) b. Last-in, first-out (LIFO) c. Weighted average cost 37.33 Xarrow_forward
- < Cost Flow Methods The following three identical units of Item JC07 are purchased during April: Units Cost April 2 April 15 April 20 Total Item Beta Purchase Purchase Purchase a. First-in, first-out (FIFO) b. Last-in, first-out (LIFO) c. Weighted average cost 1 1 1 3 $94 97 Gross Profit 100 $291 Average cost per unit ($291 + 3 units) Assume that one unit is sold on April 27 for $120. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost method. $97 Ending Inventory $arrow_forwardQuestion Content Area Trini Company had the following transactions for the month. Beginning inventory Purchased May 31 Purchased Jul. 15 Purchased Nov. 1 Totals (Goods available) Number of Units 1,060 $22 1,020 1,330 1,220 4,630 Cost per Unit A. First-in, First-out (FIFO) B. Last-in, First-out (LIFO) C. Weighted Average (AVG) 23 26 27 ? Total $23,320 23,460 34,580 32,940 Ending inventory 950 Calculate the cost of goods sold dollar value for the period for each of the following cost allocation methods, using periodic inventory updating. Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount. 114,300 Cost of Goods Sold $fill in the blank 1 $fill in the blank 2 $fill in the blank 3arrow_forwardCost Flow Methods The following three identical units of Item Alpha are purchased during April: Item Alpha Units Cost Apr. Purchase $66 14 Purchase 1 70 28 Purchase 1 74 Total 3 $210 Average cost per unit $70 ($210 ÷ 3 units) Assume that one unit is sold on April 30 for $88. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost methods. Gross Profit Ending Inventory a. First-in, first-out (FIFO) $4 22 $4 144 V b. Last-in, first-out (LIFO) $4 14 $4 126 X c. Weighted average cost $4 18 130 x Feedback ▼ Check My Work a. Sales - cost of merchandise sold = gross profit. FIFO means that the first units purchased are assumed to be the first to be sold. Therefore, ending inventory is made up of the most recent purchases. b. Sales - cost of merchandise sold = gross profit. LIFO means the last units purchased are assumed to be the first to be sold. Therefore, ending inventory is…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education