Question
Problem 6-4A The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests
Problem 6-4A
The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2017 if either the FIFO or the LIFO method had been used. For 2017, the accounting records show these data:
Inventories
Purchases and Sales
Beginning (7,000units)$14,000Total net sales (223,000units)$992,350Ending (14,000units)Total cost of goods purchased (230,000units)572,000
Purchases were made quarterly as follows.
Quarter
Units
Unit Cost
Total Cost
160,000
$2.30$138,000
250,000
2.40120,000
350,000
2.50125,000
470,000
2.70189,000
230,000
$572,000
Prepare comparative condensed income statements for 2017 under FIFO and LIFO.
GRESA INC.
Condensed Income Statements
December 31, 2017
For the Month Ended December 31, 2017
For the Year Ended December 31, 2017
FIFO
LIFO
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
$
$
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
$
$
Prepare comparative condensed income statements for 2017 under FIFO and LIFO.
GRESA INC.
Condensed Income Statements
December 31, 2017
For the Month Ended December 31, 2017
For the Year Ended December 31, 2017
FIFO
LIFO
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
$
$
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
Beginning Inventory
Cost of Goods Available for Sale
Cost of Goods Purchased
Cost of Goods Sold
Dividends
Ending Inventory
Expenses
Gross Profit / (Loss)
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Retained Earnings, January 1
Retained Earnings, December 31
Sales Revenues
Total Expenses
Total Sales Revenues
$
$
Prepare comparative condensed income statements for 2017 under FIFO and LIFO.
GRESA INC.
Condensed Income Statements
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Managerial Accounting
Authors: James Jiambalvo
3rd Edition
0470038152, 978-0470038154
