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A. The following data about Grabs' inventory and purchases from May are available: Beginning Inventory and Purchases Sales Date Units Cost Total Units 1 Inventory 8 Purchase 10 Sale 24 Purchase May 2,800 $20 $ 56,000 1,200 22 26, 400 3,200 1,600 24 38,400 Totals 5,600 $120,800 3,200 Selling price per unit is $50. 1. Assuming that Grabs uses the periodic inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. 2. Assuming that Grabs uses the perpetual inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. B. Present the information in a multistep income statement and a single-step income statement for Pasica Linens Company for the Year Ended December 31, 20xx then indicate what insights can be obtained from the multistep form as opposed to the single-step form. Note that some accounts listed are not reported on the income statement. Long-Term Debt Accounts Payable $20,238 1,380 Net sales $1,197,132 4,220 Cash Cost of goods sold 777,080 Accounts Receivable 6,411 Selling expenses 203,740 Interest expense 13,560 Salaries Payable 331 Interest income 5,720 Other Operating Revenues 13,818 Other Operating Expenses 29,003 Unearned Revenue 1,473 Advertising Expense 7,612 Equipment 13,676 General and administrative expenses 100,688

A. The following data about Grabs' inventory and purchases from May are available: Beginning Inventory and Purchases Sales Date Units Cost Total Units 1 Inventory 8 Purchase 10 Sale 24 Purchase May 2,800 $20 $ 56,000 1,200 22 26, 400 3,200 1,600 24 38,400 Totals 5,600 $120,800 3,200 Selling price per unit is $50. 1. Assuming that Grabs uses the periodic inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. 2. Assuming that Grabs uses the perpetual inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. B. Present the information in a multistep income statement and a single-step income statement for Pasica Linens Company for the Year Ended December 31, 20xx then indicate what insights can be obtained from the multistep form as opposed to the single-step form. Note that some accounts listed are not reported on the income statement. Long-Term Debt Accounts Payable $20,238 1,380 Net sales $1,197,132 4,220 Cash Cost of goods sold 777,080 Accounts Receivable 6,411 Selling expenses 203,740 Interest expense 13,560 Salaries Payable 331 Interest income 5,720 Other Operating Revenues 13,818 Other Operating Expenses 29,003 Unearned Revenue 1,473 Advertising Expense 7,612 Equipment 13,676 General and administrative expenses 100,688

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 50E: Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the...
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A. The following data about Grabs' inventory and purchases from May are available: Beginning Inventory and Purchases Sales Date Units Cost Total Units 1 Inventory 8 Purchase 10 Sale 24 Purchase May 2,800 $20 $ 56,000 1,200 22 26,400 3,200 1,600 24 38,400 Totals 5,600 $120,800 3,200 Selling price per unit is $50. 1. Assuming that Grabs uses the periodic inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. 2. Assuming that Grabs uses the perpetual inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. B. Present the information in a multistep income statement and a single-step income statement for Pasica Linens Company for the Year Ended December 31, 20xx then indicate what insights can be obtained from the multistep form as opposed to the single-step form. Note that some accounts listed are not reported on the income statement. $1,197,132 4,220 Long-Term Debt Accounts Payable Net sales $20,238 Cash 1,380 Cost of goods sold 777,080 Accounts Receivable 6,411 Selling expenses 203,740 Interest expense 13,560 Salaries Payable 331 Interest income 5,720 Other Operating Revenues 13,818 Other Operating Expenses 29,003 Unearned Revenue 1,473 Advertising Expense 7,612 Equipment 13,676 General and administrative expenses 100,688
Transcribed Image Text:A. The following data about Grabs' inventory and purchases from May are available: Beginning Inventory and Purchases Sales Date Units Cost Total Units 1 Inventory 8 Purchase 10 Sale 24 Purchase May 2,800 $20 $ 56,000 1,200 22 26,400 3,200 1,600 24 38,400 Totals 5,600 $120,800 3,200 Selling price per unit is $50. 1. Assuming that Grabs uses the periodic inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. 2. Assuming that Grabs uses the perpetual inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. B. Present the information in a multistep income statement and a single-step income statement for Pasica Linens Company for the Year Ended December 31, 20xx then indicate what insights can be obtained from the multistep form as opposed to the single-step form. Note that some accounts listed are not reported on the income statement. $1,197,132 4,220 Long-Term Debt Accounts Payable Net sales $20,238 Cash 1,380 Cost of goods sold 777,080 Accounts Receivable 6,411 Selling expenses 203,740 Interest expense 13,560 Salaries Payable 331 Interest income 5,720 Other Operating Revenues 13,818 Other Operating Expenses 29,003 Unearned Revenue 1,473 Advertising Expense 7,612 Equipment 13,676 General and administrative expenses 100,688
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