Jillet Corporation began the year with inventory of 24,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year: Purchased 120,000 additional units at a cost of $10 per unit. Terms of the purchases were 210/210 , n30/�30 . The company uses the gross method to record purchase discounts. The inventory was purchased f.o.b. shipping point and additional freight costs of $0.50 per unit were charged to Jillet. 2,400 units purchased during the year were returned to suppliers for credit. Jillet was also given credit for the freight charges of $0.50 per unit on the original purchase. The units were defective and were returned two days after they were received. The remaining inventory was paid within the discount period. (Hint: The discount applies only to inventory and not the freight.) Sales for the year totaled 115,000 units at $18 per unit. (Hint: The cost of the inventory sold includes the purchase cost of those units plus freight less purchase discount.) On December 28, Jillet purchased 6,400 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Jillet’s warehouse on January 4 of the following year. 26,600 units were on hand at the end of the year. Required: Determine ending inventory and cost of goods sold at the end of the year. Assuming that operating expenses other than those indicated in the above transactions amounted to $178,000, determine income before income taxes for the year. For financial reporting purposes, the company uses LIFO (amounts based on a periodic inventory system). Record the year-end adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $17,800. Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other than those indicated in the above transactions amounted to $178,000.

Jillet Corporation began the year with inventory of 24,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year: Purchased 120,000 additional units at a cost of $10 per unit. Terms of the purchases were 210/210 , n30/�30 . The company uses the gross method to record purchase discounts. The inventory was purchased f.o.b. shipping point and additional freight costs of $0.50 per unit were charged to Jillet. 2,400 units purchased during the year were returned to suppliers for credit. Jillet was also given credit for the freight charges of $0.50 per unit on the original purchase. The units were defective and were returned two days after they were received. The remaining inventory was paid within the discount period. (Hint: The discount applies only to inventory and not the freight.) Sales for the year totaled 115,000 units at $18 per unit. (Hint: The cost of the inventory sold includes the purchase cost of those units plus freight less purchase discount.) On December 28, Jillet purchased 6,400 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Jillet’s warehouse on January 4 of the following year. 26,600 units were on hand at the end of the year. Required: Determine ending inventory and cost of goods sold at the end of the year. Assuming that operating expenses other than those indicated in the above transactions amounted to $178,000, determine income before income taxes for the year. For financial reporting purposes, the company uses LIFO (amounts based on a periodic inventory system). Record the year-end adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $17,800. Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other than those indicated in the above transactions amounted to $178,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required:

Determine ending inventory and cost of goods sold at the end of the year.
Assuming that operating expenses other than those indicated in the above transactions amounted to $178,000, determine income before income taxes for the year.
For financial reporting purposes, the company uses LIFO (amounts based on a periodic inventory system). Record the year-end adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $17,800.
Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other than those indicated in the above transactions amounted to $178,000.

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