Income is to be evaluated under four different situations as follows: a. Prices are rising: (1)...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO is used. (2) Situation D: LIFO is used. The basic data common to all four situations are sales, 510 units for $15,300; beginning inventory, 300 units; purchases, 380 units; ending inventory, 170 units; and operating expenses, $4,000. The income tax rate is 40%. Required: 1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 300 units at $12 - $3,600; purchases, 380 units at $14-$5,320. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 300 units at $14-$4,200; purchases, 380 units at $12-$4,560. Use periodic inventory procedures. PRICES RISING PRICES FALLING Situation A Situation B Situation C Situation D FIFO LIFO FIFO LIFO Sales revenue $ 15,300 $ 15,300 $ 15,300 $ 15,300 Cost of goods sold: Beginning inventory 3,600 Purchases 5,320 Goods available for sale 8,920 Ending inventory 2,380 Cost of goods sold 6,540 Gross profit 8,760 Expenses 4,000 4,000 4,000 4,000 Pretax income 4,760 Income tax expense 1,904 Net income $ 2,856 Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO is used. (2) Situation D: LIFO is used. The basic data common to all four situations are sales, 510 units for $15,300; beginning inventory, 300 units; purchases, 380 units; ending inventory, 170 units; and operating expenses, $4,000. The income tax rate is 40%. Required: 1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 300 units at $12 - $3,600; purchases, 380 units at $14-$5,320. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 300 units at $14-$4,200; purchases, 380 units at $12-$4,560. Use periodic inventory procedures. PRICES RISING PRICES FALLING Situation A Situation B Situation C Situation D FIFO LIFO FIFO LIFO Sales revenue $ 15,300 $ 15,300 $ 15,300 $ 15,300 Cost of goods sold: Beginning inventory 3,600 Purchases 5,320 Goods available for sale 8,920 Ending inventory 2,380 Cost of goods sold 6,540 Gross profit 8,760 Expenses 4,000 4,000 4,000 4,000 Pretax income 4,760 Income tax expense 1,904 Net income $ 2,856
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Beyond inventory where else can you you use the new vendor model applied
-
Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO...
-
Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO...
-
At times we can generate a regression equation to explain outcomes. For example, an employees salary can often be explained by their pay grade, appraisal rating, education level, etc. What variables...
-
Advanced Modular Technology (AMT) typically exhibits net annual revenues that increase over a fairly long period. In the long run, an AMT project may be profitable as measured by IRR, but it's simple...
-
Why do some NASA scientists think that life on Earth could originally have come from Mars?
-
On January 1, 2020, Lessee Inc. enters into a 5-year equipment lease agreement for \(\$ 15,000\) annually (first payment due immediately). The lease grants the lessee an option to renew the lease for...
-
Patterson Awning manufactures awnings and uses a standard cost system. The company allocates overhead based on the number of direct labor hours. The following are the companys cost and standards...
-
PLEASEANSWER ACCORDING TO THE PURPLE SOLUTION. The purple image is asolution the SAME PROBLEM WITH DIFFERENT NUMBERS. Please payattention to rounding instructions as well. Thank you inadvance....
-
Given a large repository of 8-bit RGB images (24-bit in total) at 1600 x 1200 pixel dimensions, what is the ratio of storage reduction if we store all the images as 640 x 480 pixel grayscale images?
-
a) Which principle do you prefer: equality of opportunity OR equality of outcome? Why? (Meaning to say, what is *one thing that you like most about this principle?) Equality of opportunity is the...
-
Solve: (-5x2+12y) + (12x + 10y5)y' = 0. a. This equation is exact because M(x, y) and N(x, y) are both equal to b. The general solution is v(x, y) c. The particular solution passing through the point...
-
Three point charges are located at the corners of an equilateral triangle as shown in the Figure below. Find the magnitude and direction of the net electric force on the 2.00 C charge. 7.00 C 2.00 C...
-
1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. 2. Does the average cost per cup of coffee...
-
Suppose you are the project manager leading a project that would merge the five departments into one centralized department. How will you define the problem in making a business case based on the...
-
Your fire department (or agency) is developing a working group to address concerns, develop strategies, and implement comprehensive solutions to improve the health and safety of all members. The...
-
A 20-cm-square vertical plate is heated to a temperature of 30oC and submerged in glycerin at 10oC. Calculate the heat lost from both sides of the plate.
-
Classify each of the following trusses as statically determinate, statically indeterminate, or unstable. If indeterminate, state its degree. a. b. c. d.
-
Use the Mller-Breslau principle to sketch the influence lines for the vertical reaction at A, the shear at D, and the moment at D. A B Prob. F6-3 D
-
If determine 2A + B and 4A - B. A [4 5 -3] 6 1 2 and B [ -4 6 0 2 0 10
-
6. ROLE REVERSAL Write a short-answer question that highlights the difference between compensatory and consequential damages.
-
Question: Marko, a sporting goods retailer, speaks on the phone with Wholesaler about buying 500 footballs. After the conversation, Marko handwrites this message: "Confirming our discussion-you will...
-
You represent a group of neighborhood residents in a large city who are protesting construction of a skyscraper that will violate building height limitations. Draft a complaint, requesting an...
Study smarter with the SolutionInn App