You are the vice-president of finance of Sandy Alomar Corporation, a retail company. The company prepared two different schedules of gross margin for the first quarter ended March 31, 2008. These schedules appear below.

The computation of cost of goods sold in each schedule is based on the following data.

Jane Torville, the president of the corporation, cannot understand how two different gross margins can be computed from the same set of data. As the vice-president of finance, you have explained to Ms. Torville that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., first-in, first-out, and last-in, first-out. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions.

Instructions
Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flowassumptions.

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Sales Cost of ($5 per unit Goods Sold $124,900 129,400 Gross Margin $25,100 20,600 Schedule 1 Schedule 2 $150,000 150,000 Cost per Unit Total Cost Units Purchase, January 10 Purchase, January 30 Purchase, February 11 Purchase, March 17 Beginning inventory, January0,000 8,000 6,000 9,000 11,000 $4.00 4.20 4.25 4.30 4.40 $40,000 33,600 25,500 38,700 48,400