Under a perpetual inventory system, is it necessary to take a physical inventory at the end of the period? Why or why not? Joan and Pat Clair are sisters who each own and operate shops selling the latest electronics in neighboring towns. They decide to have a contest to see whose shop can be more profitable for the year. At year-end, Joan's records show sales of $210,000, cost of goods sold of $110,000, and operating expenses of $42,000. The records of Pat's shop reveal sales of $216,000, cost of goods sold of $124,000, and operating expenses of $38,000. Pat's shop also had other revenue of $6,000 received for allowing the shop to be used in taping a television show. Each sister claims to have won the contest. Provide explanations as to why each would think so, and then name the winner What is the financing period? Is a longer or shorter financing period most desireable?

Under a perpetual inventory system, is it necessary to take a physical inventory at the end of the period? Why or why not? Joan and Pat Clair are sisters who each own and operate shops selling the latest electronics in neighboring towns. They decide to have a contest to see whose shop can be more profitable for the year. At year-end, Joan's records show sales of $210,000, cost of goods sold of $110,000, and operating expenses of $42,000. The records of Pat's shop reveal sales of $216,000, cost of goods sold of $124,000, and operating expenses of $38,000. Pat's shop also had other revenue of $6,000 received for allowing the shop to be used in taping a television show. Each sister claims to have won the contest. Provide explanations as to why each would think so, and then name the winner What is the financing period? Is a longer or shorter financing period most desireable?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 5P: Business with gross receipts of $25 million or less may treat inventory as nonincidental materials...

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On January 5, 2019, ShoeKing Corp. sells for cash 500 pairs of volleyball shoes to FootAction, a shoe retailer, for 70 each. FootAction has the right to return the shoes for any reason up to March 31, 2019, for a full refund. The cost of each pair of shoes is 32. ShoeKing predicts that it is probable that 40 pairs of the shoes will be returned. ShoeKing uses the perpetual method for inventory. Required: 1. Prepare ShoeKings journal entry on January 5, 2019, to account for this transaction. 2. Assume that FootAction returns 35 pairs of shoes on March 31, 2019. Prepare the journal entry to record this return.
Business with gross receipts of $25 million or less may treat inventory as nonincidental materials and supplies. Find Regulation Section 1.162-3 and read paragraphs (a)(1) and (a)(2) to help answer the following: Frank owns an auto repair shop that serves a particular model of auto and so he tends to purchase parts in bulk. Frank is eligible to treat inventory as non-incidental materials and elects to do so. In December of 2019 he purchases 24 oil filters. He uses one to repair an auto in January 2020, and then about 2 per month and ends 2020 with 14 filters. Explain how Frank will treat his oil filter inventory.
Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.
John Neff owns and operates Waikiki Surf Shop. A year-end trial balance is provided on page 561. Year-end adjustment data for the Waikiki Surf Shop are shown below. Neff uses the periodic inventory system. Year-end adjustment data are as follows: (a, b)A physical count shows that merchandise inventory costing 51,800 is on hand as of December 31, 20--. (c, d, e)Neff estimates that customers will be granted 2,000 in refunds of this years sales next year and the merchandise expected to be returned will have a cost of 1,200. (f)Supplies remaining at the end of the year, 600. (g)Unexpired insurance on December 31, 2,600. (h)Depreciation expense on the building for 20--, 5,000. (i)Depreciation expense on the store equipment for 20--, 3,000. (j)Wages earned but not paid as of December 31, 1,800. (k)Neff also offers boat rentals which clients pay for in advance. Unearned boat rental revenue as of December 31 is 3,000. Required 1. Prepare a year-end spreadsheet. 2. Journalize the adjusting entries. 3. Compute cost of goods sold using the spreadsheet prepared for part (1).
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?
Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019. M7-6 The cost of the inventory on January 31, 2019, under the FIFO method is: a. 400 b. 2,700 c. 3,100 d. 3,200 M7-7 The cost of the inventory on January 31, 2019, under the LIFO method is: a. 400 b. 2,700 c. 3,100 d. 3,200
Patricia is a business owner who is trying to determineher cost of goods sold for the current year. She bought 20 units of inventory at $11, then 26 units at $10, and finally 18 units at $14. She sold 30 units at an average price of $16 per unit during the current year and uses FIFO for her inventory valuation. What was her cost of goods sold in the current year, assuming that there was no inventory at the beginning of the year?
Patricia Flynn owns a business called Patty's Place. The company uses a periodic inventory system. The beginning inventory balance was $31,000. A physical count determined her ending inventory was $25,000. Based on past experience, Patricia estimates that $3,000 of sales from this year will be returned next year. The cost of the merchandise expected to be returned is $900. Which of the following journal entries would record the ending inventory? a.Debit Income Summary for $25,000 and credit Merchandise Inventory for $25,000 b.Debit Income Summary for $6,000 and credit Merchandise Inventory for $6,000 c.Debit Merchandise Inventory for $6,000 and credit Cost of Goods Sold for $6,000 d.Debit Merchandise Inventory for $25,000 and credit Income Summary for $25,000
TS Quilts Inc. took a physical inventory at the end of the year and determined that $414,000 of goods were on hand. TS Inc. determined that $12,000 of goods held and included in the court were being held on consignment from PDJ outlet. Additionally, because of high rates of return on some products, TS has established an estimate of items that will be returned of $17,000. What amount should TS report in their year-end balance sheet for the inventory account?
. Vinnie has a small retail store and sells one product. His beginning inventory consisted of 1,000 products at $4 each for a total of $4,000. During the year, Vinnie made the following purchases of the product: March 1 5,000 products at $5 each = $25,000 August 1 1,000 products at $6 each = $6,000 Vinnie uses the LIFO method of inventory valuation and he sells 5,000 products during the current year. Calculate the total cost of goods available for sale. Calculate the cost of the ending inventory. Calculate the cost of goods sold.
Skysong Limited is trying to determine the value of its ending inventory as of February 28, 2020, the company’s year-end. The following transactions occurred, and the accountant asked your help in determining whether they should be recorded or not.For each of the transactions below, specify whether the item in question should be included in ending inventory, and if so, at what amount. (a) On February 26, Skysong shipped goods costing $1,440 to a customer and charged the customer $1,800. The goods were shipped with terms FOB shipping point and the receiving report indicates that the customer received the goods on March 2. Included or Not Included $ (b) On February 26, Louis Inc. shipped goods to Skysong under terms FOB shipping point. The invoice price was $450 plus $40 for freight. The receiving report indicates that the goods were received by Skysong on March 2.…
The Westmoreland Corporation uses a periodic system for its inventory. The company starts the current year with inventory costing $177,000. During the year, an additional $387,000 is paid for inventory purchases and $17,000 for transportation costs to get those items. A physical count at the end of the year finds $145,000 of ending inventory. How was each of these numbers derived? What is the company’s cost of goods sold?