Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO is used. (2) Situation D: LIFO is used. The basic data common to all four situations are sales, 520 units for $20,800; beginning inventory, 290 units; purchases, 410 units; ending inventory, 180 units; and operating expenses, $3,500. The income tax rate is 40%. Required: 1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. 2. Complete the following sentence: 3. Complete the following sentence regarding the relative effects on the cash position for each situation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. (Round your answers to nearest dollar amount.) Sales revenue Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Expenses Pretax income Income tax expense Net income Situation A FIFO $ PRICES RISING $ Situation B LIFO 20,800 $ 2,900 4,920 7,820 2,160 5,660 15,140 3,500 11,640 4,656 6,984 20,800 $ 2,900 4,920 7,820 3,500 PRICES FALLING Situation C FIFO 20,800 3,480 4,100 3,500 Situation D LIFO $ 20,800 3,480 4,100 2,160 3,500 Show less A

Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO is used. (2) Situation D: LIFO is used. The basic data common to all four situations are sales, 520 units for $20,800; beginning inventory, 290 units; purchases, 410 units; ending inventory, 180 units; and operating expenses, $3,500. The income tax rate is 40%. Required: 1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. 2. Complete the following sentence: 3. Complete the following sentence regarding the relative effects on the cash position for each situation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. (Round your answers to nearest dollar amount.) Sales revenue Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Expenses Pretax income Income tax expense Net income Situation A FIFO $ PRICES RISING $ Situation B LIFO 20,800 $ 2,900 4,920 7,820 2,160 5,660 15,140 3,500 11,640 4,656 6,984 20,800 $ 2,900 4,920 7,820 3,500 PRICES FALLING Situation C FIFO 20,800 3,480 4,100 3,500 Situation D LIFO $ 20,800 3,480 4,100 2,160 3,500 Show less A

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 5PB: Use the first-in, first-out method (FIFO) cost allocation method, with perpetual inventory updating,...

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