Question

In: Accounting

Cash $6,500 Accumulated Depreciation—Equipment $1,400 Accounts Receivable 3,800 Accounts Payable 2,900 Inventory 1,700 * Common Stock...

Cash $6,500 Accumulated Depreciation—Equipment $1,400
Accounts Receivable 3,800 Accounts Payable 2,900
Inventory 1,700 * Common Stock 22,000
Equipment 20,200 Retained Earnings 5,900
$32,200 $32,200


*(3,400 x $0.50)

The following transactions occurred during December.

Dec. 3 Purchased 4,500 units of inventory on account at a cost of $0.70 per unit.
5 Sold 4,900 units of inventory on account for $0.92 per unit. (Blue sold 3,400 of the $0.50 units and 1,500 of the $0.70.)
7 Granted the December 5 customer $276 credit for 300 units of inventory returned costing $184. These units were returned to inventory.
17 Purchased 2,100 units of inventory for cash at $0.80 each.
22 Sold 2,000 units of inventory on account for $0.96 per unit. (Blue sold 2,000 of the $0.70 units.)

(e)

Compute ending inventory and cost of goods sold under FIFO, assuming Blue Company uses the periodic inventory system.

Ending Inventory $
Cost of Goods Sold $


(f)

Compute ending inventory and cost of goods sold under LIFO, assuming Blue Company uses the periodic inventory system.

Ending Inventory $
Cost of Goods Sold $

Solutions

Expert Solution

FIFO(FIRST IN FIRST OUT METHOD)

Under this method the products purchased first are sold out first.sales take place in an orderwise.so the closing stock is valued at the latest prices.it is good inventory management system,the oldest goods should be sold first,while the most recently purchased items remain in inventory.

DATE PURCHASE    SALES BALANCE

1 1700(3400*0.50)

3 3150(4500*0.70) 3150,1700

5 1700(3400*0.50)

1050(1500*0.70) 2100(3000*0.70)

7 184(300*0.61)(RETURN) 2100,184

17 1680(2100*0.80) 2100,184,1680

22 1400(2000*0.70)

30 100*0.70=70

300*0.61=184

2100*0.80=1680

ENDING INVENTORY=70+184+1680=$ 1934

COST OF GOODS SOLD=OPENING STOCK+PURCHASES-CLOSING STOCK

(1700+ 4150- 1934)=

COST OF GOODS SOLD=5850-1934=$ 3916

LIFO(LAST IN FIRST OUT METHOD)  

Under this method,products purchased last are sold out first.it is the just reverse of FIFO method.so the closing stock is valued at the oldest prices.Hence the value of closing stock will be lower.so book profit is reduced.as a result,the tax liability is lower.

DATE PURCHASE SALES BALANCE

1 1700(3400*0.50)

3 3150(4500*0.70) 1700,3150

5 3150(4500*0.70)

200(400*0.50) 1500(3000*0.50)

7 184(300*0.61)(RETURN) 1500,184

17 1680(2100*0.80) 1500,184,1680

22 1600(2000*0.80)

30 1500(3000*0.50)

184(300*0.61)

80(100*0.80)

ENDING INVENTORY=1500+184+80=$ 1764

COST OF GOODS SOLD=OPENING STOCK+PURCHASES-CLOSING STOCK

(1700+4150-1764)=

COST OF GOOS SOLD=5850-1764=$ 4086

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Accounts payable 2,300 Accounts Receivable 1,500 Accumulated depreciation - Equipment 4,000 Cash 2,600 Common Stock 4,800...
Accounts payable 2,300 Accounts Receivable 1,500 Accumulated depreciation - Equipment 4,000 Cash 2,600 Common Stock 4,800 Equipment 7,500 Inventory 400 Land 10,000 Land held as long term investment 8,000 Notes payable (due in 5 Years) 6,000 Patent 2,500 Retained Earnings 1/1 16,000 Short- term investments 1,000 Wages Payable 400 Required: Calculate following amounts. Show all work. Total Current Assets (in order of liquidity) Total property, plant, and equipment Total Assets Total Current liabilities Total Liabilities Total Stockholders equity Prove that...
Accounts payable $18,500 Accounts receivable 8,000 Accumulated depreciation-equipment 4,800 Bonds payable 18,000 Cash 24,000 Common stock...
Accounts payable $18,500 Accounts receivable 8,000 Accumulated depreciation-equipment 4,800 Bonds payable 18,000 Cash 24,000 Common stock 25,000 Cost of goods sold 27,000 Depreciation expense 4,800 Dividends 5,300 Equipment 44,000 Interest expense 2,500 Patents 7,500 Retained earnings, January 1 16,000 Salaries and wages expense 5,200 Sales revenue 50,500 Supplies 4,500 Determine the profitability ratio that tells us for every dollars of sales revenue how much operating profit the firm has generated.And solve for the ratio.
accounts payable $10,600 accounts receivable $11,100 accumulated depreciation $24,000 advertising expense $19,600 cash $46,500 common stock...
accounts payable $10,600 accounts receivable $11,100 accumulated depreciation $24,000 advertising expense $19,600 cash $46,500 common stock $30,000 cost of goods sold 355,500 dividends 5,000 depreciation expense 9,000 equipment 175,000 income tax expense 19,875 income tax payable - insurance expense 4,500 interest expense 3,600 interest revenue 2,500 inventory 29,000 notes payable (due in 9 months) 15,000 prepaid insurance 3,625 rent expense 24,000 retained earnings (beg. bal) 91,000 salaries expense -gen/admin 20,000 salaries expense-selling 34,000 sales revenue 605,100 utilities expense 18,000 What...
Accounts payable $33,110 Merchandise inventory $34,360 Accounts receivable 13,570 Mortgage payable 106,000 Accumulated depreciation—building 61,200 Prepaid...
Accounts payable $33,110 Merchandise inventory $34,360 Accounts receivable 13,570 Mortgage payable 106,000 Accumulated depreciation—building 61,200 Prepaid insurance 4,500 Accumulated depreciation—equipment 19,880 Property tax expense 3,500 Building 175,000 Purchases 627,700 B. Hachey, capital 104,480 Purchase discounts 6,800 B. Hachey, drawings 12,700 Purchase returns and allowances 13,315 Cash 22,460 Rent revenue 3,700 Depreciation expense 14,100 Salaries expense 121,000 Equipment 57,000 Salaries payable 8,500 Freight in 5,060 Sales 875,000 Freight out 8,200 Sales discounts 8,290 Insurance expense 9,000 Sales returns and allowances 9,845...
Rank in order of liquidity: Accounts Receivable Accumulated Depreciation - Equipment Cash Equipment Prepaid Insurance Prepaid...
Rank in order of liquidity: Accounts Receivable Accumulated Depreciation - Equipment Cash Equipment Prepaid Insurance Prepaid Rent Rent Revenue Supplies
Accounts payable $       40,000 Accounts receivable           33,000 Accumulated depreciation—buildings           25,000 Ac
Accounts payable $       40,000 Accounts receivable           33,000 Accumulated depreciation—buildings           25,000 Accumulated depreciation—equipment           20,000 Advertising Expense             4,500 Bonds payable, due December 31, 2024         260,000 Buildings         180,000 Capital stock, $1 par value         220,000 Cash           92,120 Commission Expense             8,400 Cost of Goods Sold           31,480 Depreciation Office             2,970 Equipment           75,500 Income Tax Expense             7,150 Income taxes payable             3,860 Insurance Expense Sales Auto             3,200 Interest Expense             1,550 Interest payable...
Account Balance Accounts Payable* $62,000 Accounts Receivable* $41,000 Accumulated Depreciation – PPE* $116,000 Accumulated Other Comprehensive...
Account Balance Accounts Payable* $62,000 Accounts Receivable* $41,000 Accumulated Depreciation – PPE* $116,000 Accumulated Other Comprehensive Income $17,000 Additional Paid in Capital $159,000 Amortization Expense $5,000 Cash and Cash Equivalents * $79,000 Common Stock $6,000 Cost of Goods Sold $1,650,000 Depreciation Expense $20,000 Dividends $8,000 Gain on Sale of Discontinued Operations $60,000 Gain on Sale of Held-To-Maturity Securities $1,000 Goodwill* $26,000 Impairment of Intangible Assets $40,000 Interest Expense $10,000 Interest Revenue $2,000 Inventory* $88,000 Long-Term Debt $115,000 Long-Term Investments* $18,000...
Prepare an adjusted Trial balance Accounts Payable- 88,851 Accounts receivable- 442,120 Accumulated depreciation: building- 1,265 Accumulated...
Prepare an adjusted Trial balance Accounts Payable- 88,851 Accounts receivable- 442,120 Accumulated depreciation: building- 1,265 Accumulated depreciation: equipment- 9,900 Advertising Expense- 9,240 Allowance for doubtful accounts- 75,000 Allowance to Reduce Inventory to NRV- 16,000 Bad Debt Expense- 75,000 Bonds Payable- 700,000 Building- 37,500 Cash- 834,544 Common stock- 135,000 Depreciation Expense- 11,165 Dividends- 28,000 Equipment- 21,600 Impairment Loss Expense- 5,000 Income Taxes Expense- 99,000 Income taxes payable- 99,000 Insurance Expense- 22,500 Interest Expense- 31,171 Interest Payable- 35,000 Inventory- 70,000 Land- 88,000...
Debit Credit Cash 4,400 Accounts Receivable 2,000 Prepaid Insurance 1,600 Equipment 15,000 Accumulated Depreciation - Equipment...
Debit Credit Cash 4,400 Accounts Receivable 2,000 Prepaid Insurance 1,600 Equipment 15,000 Accumulated Depreciation - Equipment 3,000 Accounts Payable 2,400 Note Payable 3,920 Unearned Fees 3,200 Common Stock 5,000 Retained Earnings 2,700 Dividends 2,000 ​ Fees Earned 37,000 Wages Expense 19,000 Depreciation Expense 1,800 Utilities Expense 320 Insurance Expense 700 Maintenance Expense 7,700 Income Tax Expense 2,700    57,220 57,220 Use the Adjusted Trial above to calculate the Net Income (or Net Loss), and the Retained Earnings balance. Format: Enter...
Debit Credit Cash 4,400 Accounts Receivable 2,000 Prepaid Insurance 1,600 Equipment 15,000 Accumulated Depreciation - Equipment...
Debit Credit Cash 4,400 Accounts Receivable 2,000 Prepaid Insurance 1,600 Equipment 15,000 Accumulated Depreciation - Equipment 3,000 Accounts Payable 2,400 Note Payable 3,920 Unearned Fees 3,200 Common Stock 5,000 Retained Earnings 2,700 Dividends 2,000 ​ Fees Earned 37,000 Wages Expense 19,000 Depreciation Expense 1,800 Utilities Expense 320 Insurance Expense 700 Maintenance Expense 7,700 Income Tax Expense 2,700    57,220 57,220 Use the Adjusted Trial above to calculate the Net Income (or Net Loss), and the Retained Earnings balance.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT