Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please do requirements 2-5 & Show Steps ( i already did #1) The Gift Horse began 2018 with 60,000 units of inventory that cost $36,000.

Please do requirements 2-5 & Show Steps ( i already did #1)
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
The Gift Horse began 2018 with 60,000 units of inventory that cost $36,000. During 2018, The Gift Horse purchased merchandise on account for $352,500 Click the icon to view the purchases.) Cash payments on account totaled $326,000 during the year (ignore purchase discounts). The Gift Horse's sales during 2018 consisted of 520,000 units of inventory for $660,000, all on account. The company uses the FIFO inventory method. Cash collections from customers were $630,000. Operating expenses totaled $240,500, of which The Gift Horse paid $211,000 in cash. The Gift Horse credited Accrued Liabilities for the remainder. At December 31, The Gift Horse accrued income tax expense at the rate of 35% of income before tax, Read the requirements shit retat Requirement 1. Show how The Gift Horse would compute cost of goods sold for 2018. Units Total Cost Units sold from beginning inventory 60,000 $ 36,000 Units sold from Purchase 1 100,000 $ 65,000 Units sold from Purchase 2 270,000 $ 175,500 90,000 $ 63,000 Units sold from Purchase 3 520,000 $ 339,500 Cost of goods sold b Books Requirement 2. Prepare The Gift Horse's income statement for 2018. Show subtotals for the gross profit and income before tax. Choose from any list or enter any number in the input fields and then click Check Answer. The Gift Horse began 2018 with 60,000 units of inventory that cost $36,000. During 2018, The Gift Horse purchased merchandise on account for $352,500 (Click the icon to view the purchases.) Cash payments on account totaled $326,000 during the year (ignore purchase discounts). The Gift Horse's sales during 2018 consisted of 520,000 units of inventory for $660,000, all on account. The company uses the FIFO inventory method, Cash collections from customers were $630,000. Operating expenses totaled $240,500, of which The Gift Horse paid $211,000 in cash. The Gift Horse credited Accrued Liabilities for the remainder. At December 31, The Gift Horse accrued income tax expense at the rate of 35% of income before tax. Read the requirements. Income Statement Year Ended December 31, 2018 Sales revenue 660,000 Cost of goods sold Gross profit Operating expenses Income before tax Income tax expense Net income X 1 Data Table Purchase 1 100,000 units costing $ 65,000 Purchase 2 270,000 units costing 175,500 Purchase 3 160,000 units costing 112,000 Print Done Requirements 1. Show how The Gift Horse would compute its cost of goods sold for 2018. 2. Prepare The Gift Horse's income statement for 2018. Show subtotals for the gross profit and income before tax. 3. Make summary journal entries to record The Gift Horse's transactions for the year, assuming the company uses a perpetual inventory system. Explanations are not required. 4. Determine the FIFO cost of The Gift Horse's ending inventory at December 31, 2018, two ways: a. Use a T-account. b. Multiply the number of units on hand by the unit cost. 5. Determine The Gift Horse's gross profit percentage, rate of inventory turnover, and net income as a percentage of sales for the year. In The Gift Horse's industry, a gross profit percentage of 40%, an inventory turnover of six times per year, and a net income percentage of 7% are considered excellent. How well does The Gift Horse compare to these industry averages? Print Done

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Margins Of Error In Accounting

Authors: D. Myddelton

1st Edition

0230219918, 9780230219915

More Books

Students also viewed these Accounting questions

Question

Create a Fishbone diagram with the problem being coal "mine safety

Answered: 1 week ago

Question

Explain the various kinds of retirement plans.

Answered: 1 week ago

Question

Explain workplace flexibility (work-life balance).

Answered: 1 week ago

Question

Discuss global issues in employee benefits.

Answered: 1 week ago