Exercise 6-17 (Algo) Analyzing inventory errors LO A2 Vibrant Company had $1,030,000 of sales in each of Year 1. Year 2. and Year 3, and it purchased merchandise costing $565,000 in each of those years. It also maintained a $330,000 physical Inventory from the beginning to the end of that three year period. In accounting for inventory. It made an error at the end of Year 1 that caused its Year 1 ending Inventory to appear on its statements as $310,000 rather than the correct $330.000 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 to show the effect of this error on the company's cost of goods sold and gross profit for each of Year 1. Year 2 and Year 3. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3, VIBRANT COMPANY Comparative Income Statements Year 1 Year 2 Year 3 3-year total Cast of goods sold Exercise 6-18 (Algo) Comparing LIFO numbers to FIFO numbers; ratio analysis LO A3 Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes. Year 1 $ 280 850 Year 2 $330 910 400 865 390 460 175 LIFO inventory LIFO cost of goods sold FIFO inventory FIFO cost of goods sold Current assets (using LIFO) Current assets (using FIFO) Current liabilities 305 850 360 385 155 1. Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using (2) LIFO numbers and (0) FIFO numbers. (a) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using LIFO numbers Numerator Denominator Ratio Current ratio Inventory turnover Days' sales in inventory (b) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using FIFO numbers. Numerator 1 Denominator Ratio Current ratio Inventory turnover Exercise 6-19 (Algo) Inventory turnover and days' sales in inventory LO A3 Year 3 The following is information for Palmer Company. Year 2 Cost of goods sold 5 573,825 $ 356,650 Ending inventory 103,400 93,750 Use the above information to compute Inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2 From Year 2 to Year 3, did Palmer improve its (a) inventory turnover and (b) days' sales In Inventory? Year 1 $ 321,300 98,500 Use the above information to compute inventory turnover for Year 2, and its days sales in inventory at December 31, Year 2. Numerator Denominator Ratio Inventory turnover Days' sales in inventory Ratio Use the above information to compute inventory turnover for Year 3, and its days' sales in inventory at December 31, Year 3. Numerator Denominator Inventory turnover Days sales in inventory Did Palmer improve its (a) inventory turnover from Year 2 to Year 3 and (b) days' sales in inventory from Year 2 to Year 3? (a) Did Palmor improve its inventory turnover from Year 2 to Year 37 (b) Did Palmer improve its days' saties in inventory from Year 2 to Year 3
