Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Prepare a multiple-step income statement for Armour Co. from the following data for the year ended December 31, 2010. Sales, $905,000; cost of merchandise sold,

Prepare a multiple-step income statement for Armour Co. from the following data for the year ended December 31, 2010.

Sales, $905,000; cost of merchandise sold, $540,000; administrative expenses, $10,000; interest expense, $20,000; rent revenue, $25,000; sales returns and allowances, $35,000; selling expenses, $90,000.

Which of the following costs would be included in merchandise inventory?

(a)

Purchase price

(b)

Insurance in transit

(c)

Freight for delivery FOB shipping point

(d)

Repair due to negligence of receiving clerk

(e)

Receiving Department employee salary

(f)

Cost of processing purchase orders




For each of the following, calculate the cost of inventory reported on the balance sheet.

(a)

The total merchandise on hand at the end of the year as determined by taking a physical inventory is $62,000. Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the carrier.

(b)

The total merchandise inventory counted at the end of the year was $63,000. Purchases for $6,000 are in transit under FOB shipping point terms.

(c)

The total merchandise inventory counted at the end of the year was $75,000. Purchases for $5,000 are in transit under FOB destination terms.



Step by Step Solution

3.56 Rating (160 Votes )

There are 3 Steps involved in it

Step: 1

ANSWERS 1 C Freight for delivery FOB shipping point Free on Board FOB is a shipment term used to indicate whether the seller or the buyer is liable fo... 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

Financial Accounting: A Business Process Approach

Authors: Jane L. Reimers

3rd edition

978-013611539, 136115276, 013611539X, 978-0136115274

More Books

Students also viewed these Accounting questions