Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Chapter 5, Problem 17SEB
To determine
Calculate the amount by which the net income would differ between FIFO and LIFO.
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Students have asked these similar questions
The following data was extracted from the records of Today Company:
Sales revenue
600 units at $55 per unit
50 units at $24 per unit
Beginning inventory
Purchases
600 units at $19 per unit
What is the gross profit using the LIFO method?
A. $18,600
B. $21,600
C. $21,350
D. $20,400
How is the gross profit percentagecomputed? Illustrate its calculation and interpretationassuming Net Sales is $100,000 and Cost of Goods Sold is$60,000.
he following data are available for Sellco for the fiscal year ended on January 31, 2020:
Sales
1,600
units
Beginning inventory
500
units
@
$
4
Purchases, in chronological order
600
units
@
$
5
800
units
@
$
6
500
units
@
$
8
Required:a. Calculate cost of goods sold and ending inventory under the cost flow assumptions, FIFO, LIFO and weighted average (using a periodic inventory system): (Round unit cost to 2 decimal places.)
b. Assume that net income using the weighted-average cost flow assumption is $80,000. Calculate net income under FIFO and LIFO. (Round unit cost to 2 decimal places.)
Chapter 5 Solutions
Financial Accounting
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- Akira Company had the following transactions for the month. Calculate the gross margin for the period for each of the following cost allocation methods, using periodic inventory updating. Assume that all units were sold for $25 each. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)arrow_forwardThe following is select account information for August Sundries. Sales: $850,360; Sales Returns and Allowances: $148,550; COGS: $300,840; Operating Expenses: $45,770; Sales Discounts: $231,820. If August Sundries uses a multi-step income statement format, what is their gross margin?arrow_forwardCalculate the cost of goods sold dollar value for A67 Company for the month, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for weighted average (AVG).arrow_forward
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- Assume your company uses the periodic inventory costing method, and the inventory count left out an entire warehouse of goods that were in stock at the end of the year, with a cost value of $222,000. How will this affect your net income in the current year? How will it affect next years net income?arrow_forwardJohnson Corporation had beginning inventory of 20,000 at cost and 35,000 at retail. During the year, it made net purchases of 180,000 at cost and 322,000 at retail. Johnson nude sales of 300,000. Assuming a price index of 100 at the beginning of the year and 110 at the end of the year, compute Johnsons ending inventory at cost using the dollar-value LIFO retail method.arrow_forwardThe following information relates to CEE Company: (Refer to image). Assume that the company uses the average cost approach. What is the cost ratio? Express your answer in percentage and round up to two decimal points. * Retail Cost 500,000.00 Inventory, 12/31/2021 725,000.00 Purchases 1,285,000.00 2,220,000.00 Purchase returns 20,000.00 35,000.00 Purchase discounts 30,000.00 Sales (after employee discounts) 2,450,000.00 Sales returns 125,000.00 Sales allowances 70,000.00 Mark-ups Mark-up cancellations 160,000.00 70,000.00 Mark-down 65,000.00 Mark-down cancellations 32,000.00 Freight in Employee discounts Normal loss from breakage 65,000.00 15,000.00 10,000.00arrow_forward
- The following data are available for Sellco for the fiscal year ended on January 31, 2020: Sales 800 units 260 units @ $ 4 340 units @ $ 5 440 units @$6 190 units @ $ 8 Beginning inventory Purchases, in chronological order Required: a. Calculate cost of goods sold and ending inventory under the cost flow assumptions, FIFO, LIFO and Weighted average (using a periodic inventory system): (Round unit cost to 2 decimal places.) Cost of Goods Sold Ending Inventory FIFO LIFO Weighted average b. Assume that net income using the weighted-average cost flow assumption is $14,300. Calculate net income under FIFO and LIFO. (Round unit cost to 2 decimal places.) Net Income FIFO LIFOarrow_forwardHopkins Company reported the following information related to inventory and sales: Units Unit Cost Beginning inventory 2,200 $20 Purchase Number 18, 200 22 Purchase Number 23,200 23 Sales -10,400 units at $35 per unit. Required: Compute the following amounts: sales revenue, cost of goods sold, gross prodit, and balance sheet invenetory for avereage costing method, fifo, and lifoarrow_forwardMarquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales: August 2 11 units were purchased at $2 per unit. August 18 16 units were purchased at $4 per unit. August 29 13 units were sold. What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)arrow_forward
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