Johnson Corporation began the year with inventory of 11,000 units of its only product. The units cost $7 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year: Purchased 55,000 additional units at a cost of $11 per unit. Terms of the purchases were 2/10, 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. 1,100 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 50,000 units at $17 per unit. On December 28, Johnson purchased 5,100 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Johnsons warehouse on January 4 of the following year. 14,900 units were on hand at the end of the year. Required: Determine ending inventory and cost of goods sold at the end of the year. Assuming that operating expenses other than those indicated in the above transactions amounted to $152,000, determine income before income taxes for the year. For financial reporting purposes, the company uses LIFO (amounts based on a periodic inventory system). Record the year-end adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $15,200. Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other than those indicated in the above transactions amounted to $152,000

Requirement 3

For financial reporting purposes, the company uses LIFO (amounts based on a periodic inventory system). Record the year-end adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $15,200. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

No	Transaction	General Journal	Debit	Credit
1	1	Cost of goods sold	61,180
		LIFO reserve		61,180

Requirement 4:

Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other than those indicated in the above transactions amounted to $152,000.

Income before income taxes under LIFO

$151,382