Harold Co. reported the following current year purchases and sales data for its only product.
|
Date |
Activities |
Units Acquired at Cost |
|
Units Sold at Retail |
|
Jan. 1 |
Beginning inventory |
100 units @ $10 = |
$ 1,000 |
|
|
Jan. 10 |
Sales |
|
|
90 units @ $40 |
|
Mar. 14 |
Purchase |
250 units @ $15 = |
3,750 |
|
|
Mar. 15 |
Sales. |
|
|
140 units @ $40 |
|
July 30 |
Purchase |
400 units @ $20 = |
8,000 |
|
|
Oct. 5 |
Sales |
|
|
300 units @ $40 |
|
Oct. 26 |
Purchase |
600 units @ $25 = |
15,000 |
|
|
|
Totals
|
1,350 units
|
$27,750
|
530 units
|
Harold 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.
Assume that ending inventory is made up of 100 units from the March 14 purchase, 120 units from the July 30 purchase, and all 600 units from the October 26 purchase. Using the specific identification method, calculate (a) the cost of goods sold and (b) the gross profit.