Exercise 5-17 and 5-18

MS Cost per Unit Market per Unit Helmets 24 $50 $54 Bats 17 78 72 Shoes 38 95 91 Uniforms 42 36 36 Check UCM = $7.394 Vibrant Company had $850,000 of sales in each of Year 1 Year 2, and Year 3. and it purchased merchan- Exercise 5-17 dise costing $500,000 in each of those years. It also maintained a $250,000 physical inventory from the Analyzing inventory beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of errors Year I that caused its Year 1 ending inventory to appear on its statements as $230,000 rather than the A2 correct $250,000 1. Determine the correct amount of the company's gross profit in each of Year 1 Year 2, and Year 3. 2. Prepare comparative income statements as in Exhibit 5.11 to show the effect of this error on the com- pany's cost of goods sold and gross profit for each of Year 1 Year 2, and Year 3. Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recom- Exercise 5-18 puted inventory and cost of goods sold using FIFO for comparison purposes. Comparing LIFO numbers to FIFO numbers: ratio Year 2 Year 1 analysis $160 LIFO inventory A3 $110 LIFO cost of goods sold 740 680 240 110 FIFO inventory 660 645 FIFO cost of goods sold 220 180 Current assets (using LIFO) 300 Current assets (using FIFO) 180 200 170 Current liabilities