Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO inventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows: Sales Revenue Cost of Goods Sold Beginning Inventory Purchases $296,000 $ 38,000 198,000 236,000 131,900 Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit 104, 100 191,900 69,000 122,900 36,870 $ 86,030 Operating Expenses Income from Operations Income Tax Expense (30%) Net Income Assume you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory: Item Quantity Per Unit 2,700 1,700 7,800 3,400 $ 8 5 10 7 Purchase Cost Total $ 21,600 8,500 78,000 23,800 Net Realizable Value per Unit $ 9 3 12 A В C $131,900
Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO inventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows: Sales Revenue Cost of Goods Sold Beginning Inventory Purchases $296,000 $ 38,000 198,000 236,000 131,900 Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit 104, 100 191,900 69,000 122,900 36,870 $ 86,030 Operating Expenses Income from Operations Income Tax Expense (30%) Net Income Assume you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory: Item Quantity Per Unit 2,700 1,700 7,800 3,400 $ 8 5 10 7 Purchase Cost Total $ 21,600 8,500 78,000 23,800 Net Realizable Value per Unit $ 9 3 12 A В C $131,900
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter13: Accounting For Merchandise Inventory
Section: Chapter Questions
Problem 1MP: Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2,...
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