7. LIFO vs FIFO Consider the following record of inventories for NINO (Nothing-In-Nothing-Out) Retailing: Year 1: bought 4 units for $12 each; sold 2 unit. Year 2: bought 5 units for $15 each; sold 4 units. Year 3: bought 6 units for $16 each; sold 8 units. Assume further that the company uses LIFO and the periodic inventory system. In addition, the marginal tax rate is 21%. 7.1 Complete the following table (shaded cells): Year ElAFo EluFo LIFO reserve ALIFO reserve COGSUFO -COGSFIFO NIFIFO - NluFO 1 2

7. LIFO vs FIFO Consider the following record of inventories for NINO (Nothing-In-Nothing-Out) Retailing: Year 1: bought 4 units for $12 each; sold 2 unit. Year 2: bought 5 units for $15 each; sold 4 units. Year 3: bought 6 units for $16 each; sold 8 units. Assume further that the company uses LIFO and the periodic inventory system. In addition, the marginal tax rate is 21%. 7.1 Complete the following table (shaded cells): Year ElAFo EluFo LIFO reserve ALIFO reserve COGSUFO -COGSFIFO NIFIFO - NluFO 1 2

Name: 7. LIFO vs FIFOConsider the following record of inventories for NINO
Uploaded: 2024-03-20T06:32:37.000Z
Channel: Bartleby
Description: 7. LIFO vs FIFOConsider the following record of inventories for NINO (Nothing-In-Nothing-Out) Retailing:Year 1: bought 4 units for $12 each; sold 2 unit.Year 2: bought 5 units for $15 each; sold 4 units.Year 3: bought 6 units for $16 each; sold 8 un

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.24MCE

See similar textbooks

Similar questions

Assume your company uses the periodic inventory costing method, and the inventory count left out an entire warehouse of goods that were in stock at the end of the year, with a cost value of $222,000. How will this affect your net income in the current year? How will it affect next years net income?
Lower of Cost or Market Garcia Company uses FIFO, and its inventory at the end of the year was recorded in the accounting records at $17,800. Due to technological changes in the market, Garcia would be able to replace its inventory for $16,500. Required: 1. Using the lower of cost or market method, what amount should Garcia report for inventory on its balance sheet at the end of the year? 2. Prepare the journal entry required to value the inventory at the lower of cost or market.
Traylor Corporation began the year with three items in beginning inventory, each costing $5. During the year Traylor purchased five more items at a cost of $6 each and then two more items at a cost of $7 each. Traylor sold eight items for $10 each. If Traylor uses a periodic LIFO system, what would be Traylor’s gross profit for this year? 45 $45 $80 $80 $51 $51 $36
SLR Corporation has 1,200 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Product 1 Product 2 Cost $ 54 $ 36 Selling price 80 38 Costs to sell 4 5 Determine the carrying value of SLR’s inventory assuming that the lower of cost or net realizable value (LCNRV) rule is applied to individual products. What is the before-tax income effect of the LCNRV adjustment? What is the before-tax income effect of the LCNRV adjustment?
Tompkins Company reports the following inventory record for November: INVENTORY Date Activity # of Units Cost/Unit November 1 Beginning balance 115 $16 November 4 Purchase 350 $17 November 7 Sale (@ $53 per unit) 240 November 13 Purchase 520 $19 November 22 Sale (@ $53 per unit) 510 Selling, administrative, and depreciation expenses for the month were $15,200. Tompkins's effective tax rate is 30 percent. Required: 1. Calculate the cost of ending inventory and the cost of goods sold under each of the following methods: FIFO, LIFO, Weighted Average 2-a. What is the gross profit percentage under the FIFO method? 2-b. What is net income under the LIFO method? 3. Tompkins applied the lower of cost or market method to value its inventory for reporting purposes at the end of the month. Assuming Tompkins used the FIFO method and that inventory had a market replacement value of $17.60 per unit, what would Tompkins report on the balance sheet for inventory?
Kicks Company, a VAT taxpayer, uses the perpetual inventory method. Refer to the T-account below on its transactions for the quarter. The gross profit rate of Kicks is 30% based on sales. How much is the VAT payable for the quarter?
SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Product 1 Product 2Cost $50 $34Selling price 70 36Costs to sell 6 4 Determine the carrying value of SLR’s inventory assuming that the lower of cost or net realizable value (LCNRV) rule is applied to individual products. What is the before-tax income effect of the LCNRV adjustment?
[The following information applies to the questions displayed below.] At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $17.80 per unit: Transactions Units Amount Inventory, January 1 700 $ 2,450 Purchase, January 12 670 3,685 Purchase, January 26 230 1,725 Sale (560) Sale (200) 3. Between FIFO or LIFO, which method would result in the lower income tax expense? Assume a 30 percent average tax rate. (Round your answer to 2 decimal places.)
Tristan, Inc., uses the LIFO cost-flow assumption to value inventory. It began the current year with 1,950 units of inventory carried at LIFO cost of $69 per unit. During the first quarter, it purchased 5,550 units at an average cost of $99 per unit and sold 6,400 units at $195 per unit. 1. Assume the company does not expect to replace the units of beginning inventory sold; it plans to reduce inventory by year-end to 500 units. What amount of cost of goods sold should be recorded for the quarter ended March 31?$608,100.$633,600.$646,400.$635,300. 2. Assume the company expects to replace the units of beginning inventory sold in April at a cost of $101 per unit and expects inventory at year-end to be between 1,500 and 2,000 units. What amount of cost of goods sold should be recorded for the quarter ended March 31?$608,100.$633,600.$646,400.$635,300.
On October 5, Pronghorn Corporation buys merchandise for resale on account from Culver Corporation. The selling price of the goods is $ 5,210, and the cost to Culver Company is $ 3,250. On October 8, Pronghorn returns defective goods with a selling price of $ 670 and a cost of $ 250. It is anticipated that these goods can be resold at a discount at some point in the future for at least their cost of $ 250, if not more. Both companies use a perpetual inventory system. (a) Record the transactions on the books of Pronghorn Corporation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Oct. 5 8
On October 5, Pronghorn Corporation buys merchandise for resale on account from Culver Corporation. The selling price of the goods is $ 5,210, and the cost to Culver Company is $ 3,250. On October 8, Pronghorn returns defective goods with a selling price of $ 670 and a cost of $ 250. It is anticipated that these goods can be resold at a discount at some point in the future for at least their cost of $ 250, if not more. Both companies use a perpetual inventory system. Record the transactions on the books of Culver Corporation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Oct. 5 (Sale of merchandise on account) 5 (Cost of goods sold recorded) 8 (Return of…
Denise’s Boutique uses the perpetual inventory method for its wristlet purses. It has provided the following inventory information for October: Oct. 1 On hand, 40 units @ $20 each $ 800Oct. 8 Purchased 200 units @ $21 each 4,200Oct. 14 Sold 190 units @ $50 each 9,500Oct. 19 Purchased 100 units @ $27 each 2,700Oct. 28 Sold 120 units @ $50 each 6,000 Denise’s Boutique has a 30% effective income tax rate. A. How much is the cost of ending inventory at October 31 and the cost of goods sold for Octoberusing FIFO?B. How much is the cost of ending inventory at October 31 and the cost of goods sold for Octoberusing LIFO?C. How much will Denise’s Boutique save in income taxes if it uses LIFO?D. Calculate Denise’s Boutique’s inventory-on-hand period under both LIFO and FIFO.