Question

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

300

units

@ $14.00

=

$

4,200

Jan.

10

Sales

250

units

@ $44.00

Mar.

14

Purchase

520

units

@ $19.00

=

9,880

Mar.

15

Sales

460

units

@ $44.00

July

30

Purchase

500

units

@ $24.00

=

12,000

Oct.

5

Sales

480

units

@ $44.00

Oct.

26

Purchase

200

units

@ $29.00

=

5,800

Totals

1,520

units

$

31,880

1,190

units

Required:
Hemming uses a perpetual inventory system. Assume that ending inventory is made up of 50 units from the March 14 purchase, 80 units from the July 30 purchase, and all 200 units from the October 26 purchase. Using the specific identification method, calculate the following.
  

Answer 1

a) Cost of Goods Sold using Specific Identification
	Available for Sale			Cost of Goods Sold			Ending Inventory
Date	Activity	Units	Unit Cost	Units Sold	Unit Cost	COGS	Ending Inventory Units	Unit Cost	Ending Inventory Cost
Jan. 1	Beginning Inventory	300	$14.00	300	14	4200	0	14	0
Mar. 14	Purchase	520	$19.00	470	19	8930	50	19	950
July 30	Purchase	500	$24.00	420	24	10080	80	24	1920
Oct. 26	Purchase	200	$29.00	0	29	0	200	29	5800
		1520		1190		23210	330		8670
b) Gross Margin using Specific Identification
	Sales	52360	=1190*44
Less:	Cost of goods sold	23210
Equals:	Gross margin	29150