16-59 LIFO, FIFO, and Cash Effects Study Appendix 16A. Kalitzki Implements Company had sales revenue of $710,000 in 20X2. Pertinent data for its only product in 20X2 included the following: Inventory, December 31, 20X1 15,000 units at $12 $180,000 February purchases 20,000 units at $14 280,000 August purchases 34,000 units at $16 544,000 Sales for the year 30,000 units 1. Prepare a statement of gross margin for 20X2. Use two columns, one assuming LIFO and one assuming FIFO. 2. Assume that Kalitzki is reporting to the tax authorities and has a 45% income tax rate. Suppose all transactions are for cash. Which inventory method results in more cash for Kalitzki? By how much?

16-59 LIFO, FIFO, and Cash Effects Study Appendix 16A. Kalitzki Implements Company had sales revenue of $710,000 in 20X2. Pertinent data for its only product in 20X2 included the following: Inventory, December 31, 20X1 15,000 units at $12 $180,000 February purchases 20,000 units at $14 280,000 August purchases 34,000 units at $16 544,000 Sales for the year 30,000 units 1. Prepare a statement of gross margin for 20X2. Use two columns, one assuming LIFO and one assuming FIFO. 2. Assume that Kalitzki is reporting to the tax authorities and has a 45% income tax rate. Suppose all transactions are for cash. Which inventory method results in more cash for Kalitzki? By how much?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...

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Appendix Cost of goods sold and related items The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 20Y8: Estimated returns of current year sales 11,600 Inventory, May 1,20Y7 380,000 Inventory, April 30,20Y8 415,000 Purchases 3,800,000 Purchases returns and allowances 150,000 Purchases discounts 80,000 Sales 5,850,000 Freight in 16,600 a. Prepare the Cost of goods sold section of the income statement for the year ended April 30. 20Y8, using the periodic inventory system. b. Determine the gross profit to be-reported on the income statement for the year ended April 30, 20Y8. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventors-system?
Comprehensive The following information for 2019 is available for Marino Company: 1. The beginning inventory is 100,000. 2. Purchases returns of 4,000 were made. 3. Purchases of 300,000 were made on terms of 2/10, n/30. Eighty percent of the discounts were taken. 4. At December 31, purchases of 20,000 were in transit, FOB destination, on terms of 2/10, n/30. 5. The company made sales of 640,000. The gross selling price per unit is twice the net cost of each unit sold. 6. Sales allowances of 6,000 were made. 7. The company uses the LIFO periodic method and the gross method for purchase discounts. Required: 1. Compute the cost of the ending inventory before the physical inventory is taken. 2. Compute the amount of the cost of goods sold that came from the purchases of the period and the amount that came from the beginning inventory.
M6-13 (Algo) Preparing a Multistep Income Statement [LO 6-6] Sellall Department Stores reported the following amounts as of its December 31 year-end: Administrative Expenses, $1,600; Cost of Goods Sold, $18,360; Income Tax Expense, $2,680; Interest Expense, $1,400; Interest Revenue, $160; General Expenses, $1,800; Net Sales, $30,770; and Delivery (freight-out) Expense, $220.Prepare a multistep income statement for distribution to external financial statement users.
35.The following data were available for ABC Corp at Dec 31, 20X2:Net purchases P345,000Inventory, Dec 31 P11,000Gross Sales, 446,250Sales returns, P10,000Gross profit is 25% of costHow much was the beginning inventory during the year? 23,000 15,000 7,000 1,000
16. The income statement of Bonita Company is shown below. BONITA COMPANYINCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,470,000 Cost of goods sold Beginning inventory $2,050,000 Purchases 4,300,000 Goods available for sale 6,350,000 Ending inventory 1,650,000 Cost of goods sold 4,700,000 Gross profit 1,770,000 Operating expenses Selling expenses 430,000 Administrative expenses 700,000 1,130,000 Net income $640,000 Additional information: 1. Accounts receivable decreased $290,000 during the year. 2. Prepaid expenses increased $170,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $280,000 during the year. 4. Accrued expenses payable decreased $130,000 during the year. 5. Administrative expenses include depreciation expense of $70,000.…
17. The income statement of Headland Company is shown below. HEADLAND COMPANYINCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,940,000 Cost of goods sold Beginning inventory $1,910,000 Purchases 4,350,000 Goods available for sale 6,260,000 Ending inventory 1,600,000 Cost of goods sold 4,660,000 Gross profit 2,280,000 Operating expenses Selling expenses 450,000 Administrative expenses 710,000 1,160,000 Net income $1,120,000 Additional information: 1. Accounts receivable decreased $390,000 during the year. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $300,000 during the year. 4. Accrued expenses payable decreased $90,000 during the year. 5. Administrative expenses include depreciation expense of $50,000.…
4. The purchases of Chicken Wings Inc. during the year are as follows: 1st quarter- P1,368,000 2nd quarter- P1,320,000 3rd quarter- P2,175,000 4th quarter- P840,000 The entity’s physical count revealed the following balances of cost and NRV, respectively: January 1- P20,000; P19,000 June 30- P40,000; P38,500 December 31- P35,000; P34,600 The gross profit ratio for the year is 35%. If the company uses the allowance method, how much is the loss on inventory write-down to be recognized in the 2nd quarter?
47. Vincenzo Cassano Company sells one product, which it purchases from various suppliers. The trial balance at December 31, 2020, included the following accounts: Sales (100,000 units at P150) P15,000,000 Sales discount 1,000,000 Purchases 9,300,000 Purchase discount 400,000 Freight in 100,000 Freight out 200,000 The inventory purchases during 2020 were as follows: Units Unit cost Total cost Beginning inventory, January 1 20,000 P60 P 1,200,000 Purchases, quarter ended March 31 30,000 65 1,950,000 Purchases, quarter ended June 30 40,000 70 2,800,000 Purchases, quarter ended Sept. 30 50,000 75 3,750,000 Purchases, quarter ended Dec. 31 10,000 80 800,000 150,000 P10,500,000 Vincenzo Cassano’s accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. Cost is determined under the first-in, first-out method. Vincenzo Cassano has determined that, at December 31, 2020, the replacement cost of its inventory…
21.ABC Company has the following data at Dec 31, 20X1:a. Goods sold in transit FOB destination, P100,000b. Goods costing 12,000 has been received, included in the inventory and recorded by purchase, but inspection found that the goods were all defective and would be returned immediately.c. Goods purchased in transit, P34,000, FOB Shipping pointd. Goods in the warehouse, per count P120,000e. Goods in the store at selling price P72,000 (gross profit is 20% of cost)f. Good held on consignment for XYZ Store, P15,000How much is the ending inventory at Dec 31, 20X1? 314,000 328,000 338,000 341,000
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GANDA Co. has a recent gross profit history of 40% of net sales. These data are taken from the records for the quarter ended March 31, 2020: Inventor -January 1 P650,000 PurchasesP3,200,000 Net sales P4,500,000 Purchase return P75,000 Freight in P50,000. What is the estimated cost of inventory on March 31, 2020? A. P1,120,000 B. P1,125,000 C. P2,025,000 D. P2,700,000 E. answer not given
6.Arko Manufacturing Co. purchased 10,500 lbs. of materials XY at P2 per lb. and incurred freight cost of P1,050. A cash discount of 2% is granted on payments within ten days. Freight in is treated as additional cost of materials purchased. What unit cost must be entered on the stock card for material XY assuming that the allowance method is used in accounting for discounts? P2.06 P1.96 P2.00 P2.058