Problem:
Smith Company reported the following current-year data for its only product:
Jan. 1 Beginning Inventory 200 Units @ $10 $2,000
Mar. 14 Purchase 350 Units @ $15 5,250
Jul. 30 Purchase 4 50 Units @ $20 9,000
Oct. 26 Purchase 700 Units @ $25 17,500
Units Available 1,700 Units
Cost of Goods Available for Sale $33,750
Smith resold its products at $40 per unit on the following dates:
Jan. 10 Sales 100 units
Mar. 15 Sales 150 units
Oct. 5 Sales 310 units
Total Sales 560 units
Smith uses a perpetual inventory system. Determine the costs assigned to cost of goods sold and ending inventory using (a) FIFO and (b) LIFO. Compute the gross margin for each method.