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Concept explainers
Real World Case 8–8
Effects of
• LO8–4, LO8–6
Real World Financials
Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Inc. appears below:
Balance Sheets ($ in millions) | ||
January 2, 2016 | January 3, 2015 | |
Current assets: | ||
Inventories | $466.6 | $414.0 |
Income Statements ($ in millions) |
For the Year Ended | ||
January 2, 2016 | January 3, 2015 | |
Net sales | $2,691.6 | $2,761.1 |
Cost of goods sold | 1,636.9 | 1,673.8 |
Gross profit | $1,054.7 | $1,087.3 |
The significant accounting policies note disclosure contained the following:
Inventories
The Company used the LIFO method to value inventories. If the FIFO method had been used, inventories would have been $27.0 million and $25.1 million higher than reported at January 2, 2016 and January 3, 2015, respectively.
Required:
1. Why is Wolverine disclosing the FIFO cost of its LIFO inventory?
2. Calculate what beginning inventory and ending inventory would have been for the year ended January 2, 2016, if Wolverine had used FIFO for all of its inventories.
3. Calculate what cost of goods sold would have been for the year ended January 2, 2016, if Wolverine had used FIFO for all of its inventories.
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Chapter 8 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
- Current Assets Accounts Receivable Inventory Company 1 23,485 Company 1 O Company 2 7,354 Company 2 12,519 0 11,395 Total Assets 45400 Current Liabilities 20,374 Total Liabilities 29,816 Gross Profit 150,317 Sales 601,268 Which company marks its selling prices up the most? 1,528 3,431 753 1,753 5,349 17,830arrow_forwardView Policies Current Attempt in Progress The following data were taken from the financial records of Blossom Company. Net sales Beginning inventory Purchases Ending inventory Inventory turnover 2022 $6,310,000 Days in inventory 970,000 4,994,500 eTextbook and Media 1,040,000 2021 $6,120,000 Compute for each year the inventory turnover. (Round answers to 1 decimal place, e.g. 1.6.) 2022 2022 910,000 4,948,000 970,000 times Compute for each year the days in inventory. (Use 365 days for calculation. Round answers to 1 decimal place, e.g. 1.6.) 2021 days times 2021 daysarrow_forward4 ces Required information P7-3 (Algo) Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2, 7-3 [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 Inventory, January 1 Purchase, January 12 Purchase, January 26 Sale Sale P7-3 Part 4 Units 700 670 230 (560) (200) Amount $2,450 3,685 1,725 4. Between FIFO or LIFO, which method would produce the more favorable cash flow?arrow_forward
- 7-52 Chapter 7 Inventories: Cost Measurement and Flow Assumptions P7-13 Dollar-Value LIFO Kwestel Company adopted the dollar-value LIFO method for inventory valuation at the be- ginning of 2015. The following information about the inventory at the end of cach year is available from Kwestel's records: LO 7.7 Year Current Cost Index $ 8,000 10,800 11,500 14,000 10,500 2014 100 120 2015 2016 130 145 2017 2018 125 Required: Calculate the dollar-value LIFO inventory at the end of each year. Round to the nearest dollar.arrow_forwardQuestion Content Area Based on the following data for the current year, what is the inventory turnover? Sales on account during year $507,225 Cost of goods sold during year 190,106 Accounts receivable, beginning of year 47,004 Accounts receivable, end of year 51,339 Inventory, beginning of year 36,189 Inventory, end of year 44,233 Do not round interim calculations. Round your final answer to one decimal place. a.1.2 b.28.9 c.4.7 d.2.7arrow_forwardQuestion 25 The statement of comprehensive income and the statement of financial position disclosed relates to Boakye Limited. Boakye Limited Statement of Comprehensive Income for the year ended December 31, 2021 GHC GHC Sales 7,051,088 Opening Inventory 845,000 Purchases 7,050,250 7,895,250 (2,650,000) 5,245,250 Closing inventory Gross profit 1,805,838 Operating expenses Admin expenses (1,057,567) Distributive expenses (418,033) Depreciation (50,000) (1,525,600) NPIT/EBIT 280,238 Interest (35,600) PBT 244,638 Tax PAT (154,638) 90,000 2021 Non-current assets GHC 22 Statement of Financial Position as at December 31, 2021 2020 GHC GHC GHCarrow_forward
- Question 5 Prepare the journal entry for the inventory write-down using the LCM, net realizable method Company A is preparing their annual financial statements dated December 31, 20X1. Ending inventory is presently recorded at its total cost of $5,465. Information about its inventory item is as follows: Product Line Quantity on Hand Unit Cost When Value at Year-End Acquired (FIFO) Product A 20 12 14 Product B 75 40 38 Product C 35 55 50 Product D 10 30 35arrow_forward1.1 REQUIRED Use the information provided below to prepare an extract of the statement of comprehensive income that includes the value of closing inventory as at 31 December 2022 and gross profit for the year ended December 2022 using the following methods of inventory valuation: 1.1.1 FIFO 1.1.2 Weighted average cost INFORMATION GH Suppliers had an inventory of 10 wallets at R50 each on 01 January 2022, the start of the financial year. During 2022 the following purchases and return were recorded: 75 wallets at R60 each were purchased on 20 February 2022. 25 wallets at R80 each were purchased on 25 August 2022. 10 wallets that were purchased on 25 August 2022 were returned to the supplier. During 2022, 50 wallets were sold at R80 each and 30 wallets were sold at R100 each. 1.2 REQUIRED Calculate the economic order quantity (EOQ) from the information provided below. INFORMATION The monthly demand for an item sold by Super Stores is 1 000 units. The cost is R6 per unit and the item is…arrow_forward26 ces Required information [The following information applies to the questions displayed below] Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory. Prepaid expenses Plant assets, net Total assets Current Year $ 30,401 92,653 113,068 9,790 285,290 $ 531,208 1 Year Ago $ 37,001 66,035 85,566 9,809 259,527 $457,938 $ 133,593 97,870 162,500 137,245 $ 531,200 Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity For both the current year and one year ago, compute the following ratios: 2 Years Ago $ 37,413 48,906 53,137 3,994 227,050 $370,500 $ 76,618 104,272 163,500 113,548 $ 457,938 $ 49,884 81,062 161,500 76,054 $ 370,500 1. Express the balance sheets in common-size percents. 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable?…arrow_forward
- QUESTION 26 Use these figues to answer questions 26-29 Wickes Ltd has the following figures at December 2020 Revenue(90% credit sales) Opening Inventory Purchases-(80% on credit) 1,042,255 Trade Receivables Provision for doubtul debts 11,325 Trade payables Closing Inventory 1,936,000 145,550 237,810 160,479 160,970 Calculate the inventory turnover for Wickes Ltd for 2020arrow_forward2 Required information Problem 8-1 (Static) Various inventory transactions; journal entries [LO8-1, 8-2, 8-3] [The following information applies to the questions displayed below.] Autumn Company began the month of October with inventory of $15,000. The following inventory transactions occurred during the month: a. The company purchased inventory on account for $22,000 on October 12. Terms of the purchase were 2/10 /30 Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and freight charges of $500 were paid in cash. b. On October 31, Autumn paid for the inventory purchased on October 12. c. During October inventory costing $18,000 was sold on account for $28,000. d. It was determined that inventory on hand at the end of October cost $19,060. Problem 8-1 (Static) Part 1 Required: 1. Assuming Autumn Company uses a perpetual inventory system, prepare journal entries for the above transactions. Note: If no entry is required for a…arrow_forwardVertical Analysis Accounts Receivable Inventory Total Assets DIRECTIONS: Using these data from Rollaird Company's comparative balance sheets, perform a horizontal analysis. Use Ch. 13, "Financial Analysis: The Big Picture," as guidance. Dec. 31, 2022 Dec. 31, 2021 460,000 780,000 3,164,000 Example: 400,000 650,000 2,800,000 Accounts Receivable NOTE: When entering your numbers, use whole numbers in the equation, and 1 decimal point for the answer, as seen in the example below. The text box will highlight red if incorrect after clicking the Submit button (bottom right corner). 30000 ·I· O ·I· Similar Questions | bartleby 500000 = || || 6.0 % % View Assessment C 7arrow_forward
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