Esquire Incorporated uses the LIFO method to report its inventory. Inventory at the beginning of the year was $552,000 (23,000 units at $24 each). During the year, 86,000 units were purchased, all at the same price of $28 per unit. 88,000 units were sold during the year. Assuming an income tax rate of 25%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial statements? LIFO liquidation profit (loss)
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- Tanke Company reported net income on the year-end financial statements of $850,200. However, errors in inventory were discovered after the reports were issued. If inventory was overstated by $21,000, how much net income did the company actually earn?On December 31, Pitts Manufacturing Company reports the following assets: What is the total amount of Pitts inventory at year-end?Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the allowance method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
- Fava Company began operations in 2018 and used the LIFO inventory method for both financial reporting and income taxes. At the beginning of 2019, the anticipated cost trends in the industry had changed, so that it adopted the FIFO method for both financial reporting and income taxes. Fava reported revenues of 300,000 and 270,000 in 2019 and 2018, respectively. Fava reported expenses (excluding income tax expense) of 125,000 and 120,000 in 2019 and 2018, which included cost of goods sold of 55,000 and 45,000, respectively. An analysis indicates that the FIFO cost of goods sold would have been lower by 8,000 in 2018. The tax rate is 21%. Fava has a simple capital structure with 15,000 shares of common stock outstanding during 2018 and 2019. It paid no dividends in either year. Required: 1. Prepare the journal entry to reflect the change. 2. At the end of 2019, prepare the comparative income statements for 2019 and 2018. Notes to the financial statements are not necessary. 3. At the end of 2019, prepare the comparative retained earnings statements for 2019 and 2018.Sheffield Inc. reported total assets of $6407000 and net income of $505000 for the current year. Sheffield determined that inventory was understated by $138000 at the beginning of the year and $58300 at the end of the year. Ignoring income taxes, what is the corrected amount for total assets and net income for the year?Esquire Inc. uses the LIFO method to report its inventory. Inventory at January 1, 2021, was $700,000 (28,000 units at $25 each). During 2021, 96,000 units were purchased, all at the same price of $32 per unit. 98,000 units were sold during 2021. Assuming an income tax rate of 25%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial statements?
- Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow: Sales Cost of goods sold (LIFO) Operating expenses. Income before income taxes. Income taxes (25%) Net income Cost of goods sold (FIFO) 1stQ $ 34,000 6,400 4,400 $ 23, 200 5,800 $ 17,400 2ndQ $36,000 Net income Net income per common share 7,400 4,600 $ 24,000 6,000 $ 18,000 2019 If the FIFO method had been used since the company began operations, cost of goods sold in each of the previous quarters would have been as follows: 2019 Three Months Ended June 30 2019 2020 $18,000 $21,100 X $18.00 $20.10 3rdQ $ 38,000 8,200 5,000 $ 24,800 6,200 $ 18,600 1stQ 2ndQ 3rdQ $6,200 $7,000 $7,600 Answer is not complete. 4thQ $ 40,000 9,400 5,400 $ 25,200 6,300 $ 18,900 Sales for the second quarter of 2020 are $44,000, cost of goods sold…The Westmoreland Corporation uses a periodic system for its inventory. The company starts the current year with inventory costing $177,000. During the year, an additional $387,000 is paid for inventory purchases and $17,000 for transportation costs to get those items. A physical count at the end of the year finds $145,000 of ending inventory. How was each of these numbers derived? What is the company's cost of goods sold?On January 1 of Year 5, Benn Company changed from FIFO to LIFO for income tax and external reporting purposes. At that date, the beginning FIFO inventory (the base inventory for LIFO purposes) was $224,000. The following information is available from Benn's records for Year 5 through Year 8. Year Ending Inventory on a FIFO Basis Price Index Year 5 Year 6 Year 7 $264,000 1.1 278,400 1.2 322,400 1.3 320,000 1.2 Year 8 Required Compute the ending inventory on a dollar-value LIFO basis for Year 5, Year 6, Year 7, and Year 8. Note: Do not round until your final answer. Round your final answer to the nearest whole dollar Dollar-value LIFO ending inventory, Year 5 $ 224,000 X Dollar-value LIFO ending inventory, Year 6 $ 232,000 X Dollar-value LIFO ending inventory, Year 7 $ 247,962 X Dollar-value LIFO ending inventory, Year 8 $ 266,667 x
- Volata Company began operations on January 1, 2019. In the second quarter of 2020, It adopted the FIFO method of inventory valuation. In the past, It used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow: Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (25%) Net income Cost of goods sold (FIFO) 1stQ $ 31,000 6,100 4,100 $ 20,800 5,200 $ 15,600 Net income Net income per common share: 1stQ $5,900 2ndQ $ 33,000 7,100 4,300 Three Months Ended June 30 2019 2020 $ 21,600 5,400 $ 16,200 S 2019 18,300 S 18.30 2019 3rdQ $ 35,000 Answer is not complete. 7,900 4,700 If the FIFO method had been used since the company began operations, cost of goods sold in each of the previous quarters would have been as follows $ 22,400 5,600 $ 16,800 2ndQ 3rdQ $6,700 $7,300 4thQ $ 37,000 9,100 5,100 $ 22,800 5,700 $ 17,100 Six Months Ended June 30 2019 2020 4thQ $ 8,100 Sales for the second quarter of 2020 are…At the beginning of the year, Sheridan Company had an inventory of $745000. During the year, the company purchased goods costing $1629950. If Sheridan Company reported ending inventory of $81000 and sales of $3730000, the company's cost of goods sold and gross profit rate must be $1436050 and 62.6%. $ 2293950 and 61.5%. $1436050 and 38.5 %. $ 2293950 and 38.5%. At the beginning of the year, Sheridan Company had an inventory of $745000. During the year, the company purchased goods costing $1629950. If Sheridan Company reported ending inventory of $81000 and sales of $3730000, the company's cost of goods sold and gross profit rate must be $1436050 and 62.6%. $2293950 and 61.5% O $1436050 and 38.5% O $2293950 and 38.5%Veron Inc. reported total assets of $1,600,000 and net income of $85,000 for the current year.Veron determined that inventory was understated by $23,000 at the beginning of the year and$10,000 at the end of the year. What is the corrected amount for total assets and net income forthe year?a. $1,610,000 and $95,000.b. $1,590,000 and $98,000.c. $1,610,000 and $72,000.d. $1,600,000 and $85,000