Assume that ending inventory is made up of 45 units from the March 14 purchase, 75 units from the July 30 purchase: and all the units of the October 26 purchase. Using the specific identification method, calculate (a) the cost of goods sold and (b) the gross profit.

Exercise 17-3

Hemming Co. reported the following current-year purchases and sales data for its only product.

Hemming uses a periodic inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Compute the gross profit for each method.

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Date Activities Jan. I Beginning Inventory Sales .... Jan. 10 Mar. 14 Purchase Mar. 15 Sales.... July 30 Purchase Oct. 5 Sales Oct. 26 Purchase Totals Units Acquired at Cost 200 units @ $10 = $ 2,000 350 units @ $15 = 5,250 450 units @ $20 = 9,000 100 units @ $25 = 2,500 1,100 units $18,750 Units Sold at Retail 150 units @ $40 300 units @ $40 430 units @ $40 880 units Date Activities Jan. I Beginning Inventory Sales .... Jan. 10 Mar. 14 Purchase Mar. 15 Sales.... July 30 Purchase Oct. 5 Sales Oct. 26 Purchase Totals Units Acquired at Cost 200 units @ $10 = $ 2,000 350 units @ $15 = 5,250 450 units @ $20 = 9,000 100 units @ $25 = 2,500 1,100 units $18,750 Units Sold at Retail 150 units @ $40 300 units @ $40 430 units @ $40 880 units

Answer rating: 100% (QA)

a Specific identification methodCost of goods sold Cost of goods available for sale 18750 Ending In... View the full answer