Question

1.

Financial information is presented below:

Operating expenses	$ 40000
Sales returns and allowances	2000
Sales discounts	6000
Sales revenue	166000
Cost of goods sold	86000

The amount of net sales on the income statement would be

$160000.

$166000.

$158000.

$164000.

2.

Financial information is presented below:

Operating expenses	$ 60000
Sales returns and allowances	2000
Sales discounts	6000
Sales revenue	140000
Cost of goods sold	106000

Gross Profit would be

$36000.

$32000.

$34000.

$26000.

3.

Novak has the following inventory data:

Nov. 1		Inventory		37 units @ $7.30 each
8		Purchase		146 units @ $7.85 each
17		Purchase		73 units @ $7.70 each
25		Purchase		110 units @ $8.10 each

A physical count of merchandise inventory on November 30 reveals that there are 122 units on hand. Ending inventory under FIFO is

$1932.

$937.

$1886.

$983.

4.

Pharoah Company had the following inventory transactions occur during 2022:

				Units		Cost/unit
Feb. 1, 2022		Purchase		134		$56
Mar. 14, 2022		Purchase		231		$58
May 1, 2022		Purchase		164		$61

The company sold 379 units at $78 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, and operating expenses of $2232, what is the company’s after-tax income using LIFO?

$4856.00

$3901.80

$3399.20

$5574.00

Answer 1

Answer
1
Sales revenue	166000
Less: Sales returns and allowances	-2000
Less: Sales discounts	-6000
Net sales	158000
Option C $158,000 is correct

2
Gross Profit = Sales revenue - Sales returns and allowances - Sales discounts - Cost of goods sold
Gross Profit = $140,000 - $2,000 - $6,000 - $106,000
Gross Profit = $26,000
Option D $26,000 is correct

3
FIFO
Total Units Available for sale		366
Units Sold		244
Closing Stock in Units		122
Valuation
Ending Inventory	110	@	$               8.10	$891
	12	@	$               7.70	$92
Value Of Ending Inventory				$                  983
Cost of Goods sold	(2869-983)			$              1,886
.
	Units	Cost per unit	value
Beginning Balance	37	$                     7.30	$270
Purchases
	146	$                     7.85	$1,146
	73	$                     7.70	$562
	110	$                     8.10	$891
Total	366		$2,869
Option C $1,886 is correct