Principles of Accounting
12th Edition
ISBN: 9781285607047
Author: NEEDLES
Publisher: Cengage Learning
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Chapter 7, Problem 5EA
1.
To determine
Determine net income using period inventory system under both FIFO and LIFO, and then identify the method which generates larger cash flow.
2.
To determine
Identify the effect on net income and on cash flow under each method, if company purchases 10,000 cases at $15 per case at the end of year.
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Students have asked these similar questions
Hogan Industries had the following inventory transactions occur during 2017:
Units Cost/unit
Feb. 1, 2017 Purchase
95
$40
Mar. 14, 2017 Purchase 164 $41
May 1, 2017 Purchase
116
$43
The company sold 269 units at $55 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is
the company's gross profit using FIFO? (rounded to whole dollars)
Koopman Company began operations on January 1, 2015, and uses the FIFO inventory method for financial reporting and the average cost inventory method for income taxes. At the beginning of 2017, Koopman decided to switch to the average cost inventory method for financial reporting. It had previously reported the following financial statement information for 2016:
KOOPMAN COMPANY
Income Statement
For the Year Ended December 31, 2016
1
Revenues
$100,000.00
2
Cost of goods sold
(60,000.00)
3
Gross profit
$40,000.00
4
Operating expenses
(25,000.00)
5
Income before income taxes
$15,000.00
6
Income tax expense
(4,500.00)
7
Net income
$10,500.00
8
Earnings per share
$1.05
KOOPMAN COMPANY
Retained Earnings Statements
For Year Ended December 31, 2016
1
Beginning retained earnings
$15,000.00
2
Add: Net income
10,500.00
3
$25,500.00
4
Less:…
For 2015, ff information is provided on YG Corporation's cost of inventory using the FIFO and average methods.
FIFO
Average
Beginning Inventory
USD 120, 000
USD 106, 000
Ending Inventory
USD 148, 000
USD 112, 000
YG Corp currently employs a periodic inventory system as well as FIFO. In 2015, the company made a gross profit of USD 528, 000.
What will YG's gross profit be in 2015 if it switches from the FIFO method to the average method?
Chapter 7 Solutions
Principles of Accounting
Ch. 7 - Prob. 1DQCh. 7 - Which of the following methods do not require a...Ch. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 1SECh. 7 - Assume the following data with regard to inventory...Ch. 7 - Prob. 3SE
Ch. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 1EACh. 7 - Prob. 2EACh. 7 - Prob. 3EACh. 7 - Prob. 4EACh. 7 - Prob. 5EACh. 7 - Prob. 6EACh. 7 - During July 2014, Micanopy, Inc., sold 500 units...Ch. 7 - Prob. 8EACh. 7 - Prob. 9EACh. 7 - Prob. 10EACh. 7 - Prob. 11EACh. 7 - Prob. 12EACh. 7 - Midori Company merchandises a single product...Ch. 7 - The inventory of Wood4Fun and data on purchases...Ch. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6APCh. 7 - DiPaolos inventory, purchases, and sales for March...Ch. 7 - Prob. 8APCh. 7 - Prob. 9APCh. 7 - Zubac Company is a large retail furniture company...Ch. 7 - Prob. 1CCh. 7 - Prob. 2CCh. 7 - ExxonMobil Corporation had net income of 41.0...Ch. 7 - Prob. 4CCh. 7 - JCPenney, a large retail company with many stores,...
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