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Johnson Corporation began 2018 with inventory of 30,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system
Johnson Corporation began 2018 with inventory of 30,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2018:
- Purchased 150,000 additional units at a cost of $10 per unit. Terms of the purchases were 1/10, n/30, and 100% of the purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $0.40 per unit were paid by Johnson.
- 3,000 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.40 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received.
- Sales for the year totaled 145,000 units at $16 per unit.
- On December 28, 2018, Johnson purchased 7,000 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2019.
- 32,000 units were on hand at the end of 2018.
Required:
1.Complete the below table to determine the ending inventory and cost of goods sold for 2018.
2.Assuming that operating expenses other than those indicated in the above transactions amounted to $190,000, determine income before income taxes for 2018.
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