the financial w 000 from April to April 16. It was or recovered from customers y reached an agreement with the insurance company that she average of the gross profit rates for the preceden so) and 2014 showed the following data. 2014 Net sales S600.000 Cost of goods purchased 404.000 Beginning inventory 60,000 40.000 Ending inventory 80,000 cost of $17,000 was salvaged from the fire. 2013 5480,000 350.000 60,000 w with a es divided into groups, answer the following the balances in (1) Sales Revenue and (2) Purchases at April 10. the average gross profit rate for the years 2013 and 2014. (Hint: Find the gross prom ach year and divide the sum by 2.) in the inventory loss as a result of the fire, using the gross profit method N ermine the la communication Activity you are the controller of Small Toys Inc. Marta Johns, the president, recently mentioned but she found an error in the 2014 financial statements which she believes has corrected se determined, in discussions with the Purchasing Department, that 2014 ending inventory stated by 1 million. Marta says that the 2015 ending inventory is correct. Thus, she that 2015 income is correct. Marta says to you, "What happened has happened theres point in worrying about it anymore." 2011 Aeros onclude that Marta is incorrect. Write a brief tactful memo to Marta, clarifying the situation. Ethics Case 57 RJ. Graziano Wholesale Corp. uses the LIFO method of inventory costing. In the current aprofitat R. J. Graziano is running unusually high. The corporate tax rate is also high this year, but So scheduled to decline significantly next year. In an effort to lower the current year's net income and e advantage of the changing income tax rate, the president of R.J. Graziano Wholesale instructs plant accountant to recommend to the purchasing department a large purchase of inventory for Wir 3 days before the end of the year. The price of the inventory to be purchased has doubled dur the year, and the purchase will represent a major portion of the ending inventory value. Restrictions a) What is the effect of this transaction on this year's and next year's income statement and income tax expense? Why? WIR J. Graziano Wholesale had been using the FIFO method of inventory costing, would the president give the same directive? (c) Should the plant accountant order the inventory purchase to lower income? What are the ethical implications of this order? All About You BYP6-8 Some of the largest business frauds ever perpetrated have involved the misstatement of inventory. Two chies were at Leslie Fay and McKesson Corporation. Instructions There is conside: le information regarding inventory frauds available on the Internet. Search for information abre of the two cases mentioned above, or inventory fraud at any other company and prepare a bit explanation of the nature of the inventory fraud. You CUCI Ethics Case BYPG-7 R year, profit at R. J. Gre 06.7 R. J. Graziano Wholesale Corp. uses the LIFO method of inventory costing. In the current anafit at R. J. Graziano is running unusually high. The corporate tax rate is also high this year, but scheduled to decline significantly next year. In an effort to lower the current year's net income and take advantage of the changing income tax rate, the president of R. J. Graziano Wholesale instructs lanlant accountant to recommend to the purchasing department a large purchase of inventory for Lalivery 3 days before the end of the year. The price of the inventory to be purchased has doubled dur- in the year, and the purchase will represent a major portion of the ending inventory value. Instructions (a) What is the effect of this transaction on this year's and next year's income statement and income tax expense? Why? (b) If R. J. Graziano Wholesale had been using the FIFO method of inventory costing, would the president give the same directive? (c) Should the plant accountant order the inventory purchase to lower income? What are the ethical implications of this order
