The accounting records of Brooks Photography, Inc., reflected the following balances as of January 1, 2012: Cash
Question:
The accounting records of Brooks Photography, Inc., reflected the following balances as of January 1, 2012:
Cash $19,000
Beginning inventory 6,750 (75 units @ $90)
Common stock 7,500
Retained earnings 18,250
The following five transactions occurred in 2012.
1. First purchase (cash) 100 units @ $92
2. Second purchase (cash) 175 units @ $100
3. Sales (all cash) 300 units @ $170
4. Paid $15,000 cash for operating expenses.
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) LIFO cost flow, and
(3) Weighted-average cost flow.
b. Use a vertical model to prepare the 2012 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Brooks Photography Inc Inventory Purchases Beginning Inventory 75 90 6750 First Purchase 100 92 9200 Second Purchase 175 100 17500 Total 350 33450 a Cost of Goods Sold FIFO Units Cost per Unit Cost of ...View the full answer
