Suppose a division of Nevada Instruments Incorporated that sells computer microchips has these inventory records for January 2018: l (Click the icon to view the inventory records.) The company's accounting records show 450 units were sold for revenue of $10,800. Operating expense for January was $2.400 Read the requirements. Requirement 1. Prepare the company's January, multistep income statement Calculate income using the LIFO, average-cost, and FIFO methods. Label the bottom line "Operating income." Round the average cost per unit to three decimal places and all oter figures to whole-dollar amounts. Show your computations. Begin by preparing the income statement using LIFO, then average, and finally FIFO cost Requirements Nevada Instruments Incorporated Income Statement for Microchip Month Ended January 31, 2018 LIFO 1. Prepare the company's January, multistep income statement. Calculate Data Table income using the LIFO, average-cost, and FIFO methods. Label the bottom line Operating incoie. Round the places and all other figures to whole-dol lar amounts. Show your computations. e average cost per unit to three decimal Sales revenue Cost of goods sold Gross profit Operating expenises Operating income 2. Suppose you are the financial vice president of Nevada Instruments. Which inventory method will you use if your mattve is to a. miniize income taxes? b. report the highest operating income? c. report operating incone between the extremes of FIFO and LIFO? d. report inventory on the balance sheet at the most current cost? e. attain the best measure of net incorne for the income statement? Quantity Unit Cost Total Cost Jan Beginning inventory 180 units15 2,700 1,190 3,400 1,520 Date Item 6 Purchase 21 Purchase 27 Purchase 70 units 200 units 90 units 18 State the reason for each of your answers. PrintDone PrintDone Enter any number in the edit fields and then click Check Answer Question Help * 6END_summary (similar to) The Book Nock began 2018 with 40,000 units of inventory that cost $16,000. During 2018, The Book Nook purchased E(Click the icon to view the purchases.) on account for $510,000: Cash payments on account totaled $454,000 during the year (ignore purchase discounts). The Book Nook's sales during 2018 consisted of 570,000 units of inventory for $855,000, all on account. The company uses the FIFO inventory method. Cash collections om stomers were $584 D00 Operating expenses totaled S280 30 ) of which The Book Nook paid $158 000 in cash. The Book Nook credited Accrued Liabilities to the remainder. At December 31 The B No a crued income tax 6xpense at the rate of 40% of income before tax. Read the reguirements, Requirement 1. Show how The Book Nook would compute cost of goods sold for 2018. Units Total Cost Data Table Units sold from beginning inventory Units sold from Purchase1 Units sold from Purchase 2 Units sold from Purchase 3 Cost of goods sold 1. Show how The Book Nook would compute its cost of goods sold for 2018, 2. Prepare The Book Nook's income statenent for 2013. Show subtotals for the gross profit and income before tavx. 3. Make summary journal entries to record The Book Nook's transactions for the Purchase 1 150,000 units costing Purchase 2 300,000 units costing Purchase 3 210,000 units costing 135,000 270,000 105,000 year, assuming the company uses a perpetual inventory systerm. Explanationis are not required. 570,000 4. Determine the FIFO cost of The Book Nook's ending inventory at December 31, 2018, two ways: a. Use a T-account b. Mutiply the number of units on hand by the unit cost. Print Done 5. Determine The Book Nook's gross profit percentage, rate of inventory turnover and rot income as a percentage of sales for thyear. In The Book Nook'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 Book Nook compare to these industry averages? Print Done Enter any number in the edit fields and then click Check
