Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Problem 5-19B Effect of different inventory cost flow methods on financial statements LO 5-1 The accounting records of Octavia's Flower Shop reflected the following balances
Problem 5-19B Effect of different inventory cost flow methods on financial statements
LO 5-1
The accounting records of Octavia's Flower Shop reflected the following balances as of January 1, Year 3: CHECK FIGURES
cash
Beginning inventory common stock
Retained earnings
$92,500
36,000 (225 units @ $160)
60,000
68,500
The following five transactions occurred in Year 3:
- First purchase (cash): 130 units @ $140
- Second purchase (cash): 180 units @ $165
- Sales (all cash): 380 units @ $335
- Paid $42,000 cash for salaries expense
- Paid cash for income tax at the rate of 30 percent of income before taxes
Required
- Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cos flow, and (3) weighted-average cost flow. Compute the income tax expense for each method.
- Prepare the Year 3 income statement, balance sheet, and statement of cash flows under FIR LIFO, and weighted average. (Hint: Record the events under an accounting equation before prep ing the statements.)
Problem 5-19B Effect of different inventory cost flow methods on financial statements LO 5-1 The accounting records of Octavia's Flower Shop reflected the following balances as of January 1. Year 3; CHECK FIGURES a. Cost of Goods Sold FIFO: $58,325 b. Net Income LIFO: $18,340 The following five transactions occurred in Year 3: 1. First purchase (cash): 130 units @ \$140 2. Second purchase (cash): 180 units @ \$165 3. Sales (all cash): 380 units @ $335 4. Paid $42,000 cash for salaries expense 5. Paid cash for income tax at the rate of 30 percent of income before taxes Required a. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIF:=2 flow, and (3) weighted-average cost flow. Compute the income tax expense for each method b. Prepare the Year 3 income statement, balance sheet, and statement of cash flows unde filiz LIFO, and weighted average. (Hint: Record the events under an accounting equation beforep ing the statements.) Protlem 198 A. 1. Cost of Cioods Sold Ending impentory 2. Cost of 6ioods sold thding imentery Ervofing Inventury 3. Cost of 5 pods sold Enable Editing Viewing 3. Cost of Goods sold Endine Invertory Vieving Kea cin any vicw wot fare perminies You can only new nat have permist
Problem 5-19B Effect of different inventory cost flow methods on financial statements
LO 5-1
The accounting records of Octavia's Flower Shop reflected the following balances as of January 1, Year 3: CHECK FIGURES
cash
Beginning inventory common stock
Retained earnings
$92,500
36,000 (225 units @ $160)
60,000
68,500
The following five transactions occurred in Year 3:
- First purchase (cash): 130 units @ $140
- Second purchase (cash): 180 units @ $165
- Sales (all cash): 380 units @ $335
- Paid $42,000 cash for salaries expense
- Paid cash for income tax at the rate of 30 percent of income before taxes
Required
- Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cos flow, and (3) weighted-average cost flow. Compute the income tax expense for each method.
- Prepare the Year 3 income statement, balance sheet, and statement of cash flows under FIR LIFO, and weighted average. (Hint: Record the events under an accounting equation before prep ing the statements.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started