Question
ACC 101 Lab Fall 2023 Name: Lab Assignment #5 Multiple Choice (1.8 points each) The 2023 inventory data for Island Corporation is presented below. Assume
ACC 101 Lab Fall 2023 | Name: | |
Lab Assignment #5 |
Multiple Choice (1.8 points each)
The 2023 inventory data for Island Corporation is presented below. Assume that Island uses periodic inventory tracking.
2023 Beginning Inventory (purchased in 2022) | 100 units @ $28 per unit | |
Purchases: | ||
Purchase 1 on 1/20/23 | 300 units @ $30 per unit | |
Purchase 2 on 6/15/23 | 1,100 units @ $34 per unit | |
Sales: | ||
Sale 1 on 4/8/23 | 520 units @ $60 per unit | |
Sale 2 on 9/25/23 | 860 units @ $60 per unit |
When Island examines the actual units in ending inventory, they see that 30 of the units are from 2023 beginning inventory, 40 units are from the 1/20/23 purchase, and 50 units are from the 6/15/23 purchase.
- What is Inventory on the 12/31/23 Balance Sheet if Island uses FIFO?
- $3,400
- $4,080
- $45,120
- $45,800
- What is Cost of Goods Sold on the 2023 Income Statement if Island uses LIFO?
- $3,400
- $4,080
- $45,120
- $45,800
- What is Inventory on the 12/31/23 Balance Sheet if Island uses Specific Identification?
- $3,740
- $4,080
- $45,120
- $45,460
- What is Gross Profit on the 2023 Income Statement if Island uses Weighted Average Cost?
- $3,936
- $37,536
- $45,264
- $78,864
- On October 28, 2023, GE sells and ships $400,000 worth of merchandise to Best Buy. The goods are shipped FOB destination and arrive at Best Buy stores on November 4. Which of the following statements is TRUE?
- Best Buy includes the $400,000 as part of its October 31 Inventory balance.
- The goods are in transit on October 31 so neither company includes the $400,000 as part of its October 31 Inventory balance.
- GE includes the $400,000 as part of its October 31 Inventory balance.
- Both companies include the $200,000 as part of their October 31 Inventory balances.
- In a period of falling prices, which of the following statements is true?
- LIFO produces a lower cost for ending inventory than FIFO
- Average cost produces a higher net income than FIFO or LIFO
- LIFO produces a higher cost of goods sold than FIFO
- FIFO produces a lower amount of net income than LIFO
- Sleep Inc. uses a periodic inventory system. When a warehouse supervisor counts the inventory on December 31, 2022, he accidentally counts one pile of blankets twice, resulting in 2022 ending inventory being overstated by $200,000. The warehouse supervisor counts the December 31, 2023 inventory correctly. Which of the following statements is true related to Sleeps 2022 and 2023 financial statements?
- 2022 Cost of Goods Sold will be understated by $200,000.
- 2023 Cost of Goods Sold will be overstated by $200,000.
- 2023 Beginning Inventory will be understated by $200,000.
- Both a and b are true.
- All of the above are true.
Use Newell Brands, Inc.'s most recent financial statements to answer the following three questions.
- Which inventory cost flow assumption does Newell Brands use to value its inventories?
- LIFO
- FIFO
- Weighted Average Cost
- Specific Identification
- What is the most likely reason that Newell Brands chose this inventory cost flow assumption (given rising price trend)?
- To report higher Net Income on its Income Statement.
- To report higher Total Assets on its Balance Sheet.
- To pay less taxes.
- Both a and b are true.
- Which of the following statements about Newell Brands is TRUE?
- Fiscal year 2022 Gross Profit > Fiscal year 2021 Gross Profit.
- Fiscal year 2022 COGS > Fiscal year 2021 COGS.
- Fiscal year 2021 Gross Profit > Fiscal year 2020 Gross Profit.
- Fiscal year 2022 Operating Income
- Both c and d are true.
Problem (32 points)
Mist Company uses a PERIODIC inventory system. Mist had the following inventory purchases and sales during 2023:
2023 Beginning Inventory (purchased in 2022)
Purchases: | 60 units @ $20 per unit
| |
Purchase 1 on 3/8/23 | 140 units @ $28 per unit | |
Purchase 2 on 8/5/23 | 50 units @ $32 per unit | |
Sales: | ||
Sale 1 on 5/8/23 | 80 units @ $90 per unit | |
Sale 2 on 9/13/23 | 125 units @ $90 per unit | |
Of the items sold on 5/8/2023, 60 units were from the beginning inventory and 20 units were from 3/8/23 purchase. The 9/13/23 sale included 85 units from the 3/8/23 purchase and 40 units from the 8/5/23 purchase.
Show how Mist's Balance Sheet and Income Statement would look under each of the inventory cost flow assumptions. Compute Ending Inventory, Sales, COGS, and Gross Profit under Specific Identification, Weighted Average Cost, FIFO and LIFO. Fill in your answers on the table below. SHOW YOUR WORK. Round per unit cost to the nearest cent.
Specific Identification | Weighted Average | FIFO | LIFO | ||||||
12/31/23 Balance Sheet | |||||||||
Inventory | |||||||||
2023 Income Statement | |||||||||
Sales | |||||||||
Cost of Goods Sold | |||||||||
Gross Profit | |||||||||
Newell Brands, Inc. Financial Statements (partial)
Consolidated Income Statements In millions of dollars | |||||||
Year ended Dec 31, 2022 | Year ended Dec 31, 2021 | Year ended Dec 31, 2020 | |||||
Net sales | $ 9,459 | $ 10,589 | $ 9,385 | ||||
Cost of goods sold | 6,625 | 7,226 | 6,301 | ||||
Selling, general, and administrative expenses | 2,522 | 2,350 | 3,713 |
Consolidated Balance Sheets In millions of dollars | |||||
ASSETS | As of Dec 31, 2022 | As of Dec 31, 2021 | |||
Cash and cash equivalents | $ 287 | $ 440 | |||
Accounts receivable, net | 1,250 | 1,500 | |||
Inventories | 2,203 | 2,087 | |||
Prepaid expenses and other current assets | 312 | 325 | |||
Total current assets | $ 4,052 | $ 4,352 |
Notes to Consolidated Financial Statements (partial) |
Footnote 1. Summary of Significant Accounting Policies
1.1. Description of Business Newell Brands is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmers, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, Spontex, Coleman, Campingaz, Contigo, Oster, Sunbeam and Mr. Coffee. Newell Brands' beloved brands enhance and brighten consumers lives at home and outside by creating moments of joy, building confidence and providing peace of mind. The Company sells its products in nearly 200 countries around the world and has operations on the ground in over 40 of these countries, excluding third-party distributors.
5. Inventories Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. The Company reduces its inventory value for estimated obsolete and slow-moving inventory in an amount equal to the difference between the cost of inventory and the net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.
|
newell newell newell newell
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started