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

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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?
1. $3,400
2. $4,080
3. $45,120
4. $45,800

What is Cost of Goods Sold on the 2023 Income Statement if Island uses LIFO?
1. $3,400
2. $4,080
3. $45,120
4. $45,800

What is Inventory on the 12/31/23 Balance Sheet if Island uses Specific Identification?
1. $3,740
2. $4,080
3. $45,120
4. $45,460

What is Gross Profit on the 2023 Income Statement if Island uses Weighted Average Cost?
1. $3,936
2. $37,536
3. $45,264
4. $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?
1. Best Buy includes the $400,000 as part of its October 31 Inventory balance.
2. The goods are in transit on October 31 so neither company includes the $400,000 as part of its October 31 Inventory balance.
3. GE includes the $400,000 as part of its October 31 Inventory balance.
4. 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?
1. LIFO produces a lower cost for ending inventory than FIFO
2. Average cost produces a higher net income than FIFO or LIFO
3. LIFO produces a higher cost of goods sold than FIFO
4. 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?
1. 2022 Cost of Goods Sold will be understated by $200,000.
2. 2023 Cost of Goods Sold will be overstated by $200,000.
3. 2023 Beginning Inventory will be understated by $200,000.
4. Both a and b are true.
5. 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?
1. LIFO
2. FIFO
3. Weighted Average Cost
4. Specific Identification

What is the most likely reason that Newell Brands chose this inventory cost flow assumption (given rising price trend)?
1. To report higher Net Income on its Income Statement.
2. To report higher Total Assets on its Balance Sheet.
3. To pay less taxes.
4. 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.

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