Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Question
Chapter 5, Problem 7SEA
To determine
Calculate the amount by which the net income would differ between FIFO and LIFO.
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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.)
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.
Chapter 5 Solutions
Financial Accounting
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- Johnson 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_forwardAssume 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_forwardComprehensive The following information for 2019 is available for Marino Company: 1. The beginning inventory is 100,000. 2. Purchases returns of 4,000 were made. 3. Purchases of 300,000 were made on terms of 2/10, n/30. Eighty percent of the discounts were taken. 4. At December 31, purchases of 20,000 were in transit, FOB destination, on terms of 2/10, n/30. 5. The company made sales of 640,000. The gross selling price per unit is twice the net cost of each unit sold. 6. Sales allowances of 6,000 were made. 7. The company uses the LIFO periodic method and the gross method for purchase discounts. Required: 1. Compute the cost of the ending inventory before the physical inventory is taken. 2. Compute the amount of the cost of goods sold that came from the purchases of the period and the amount that came from the beginning inventory.arrow_forward
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