Question

Ein Company began operations in February 2019. Ein’s accounting records provide the following data for the remainder of 2019 for one of the items the company sells:

Activity	Units	Purchase Price (per unit)	Sale Price (per unit)
Beginning inventory	9	$58
Purchase 1, Feb. 15	6	72
Purchase 2, Mar. 22	8	80
Sale 1, Apr. 9	10		$150
Purchase 3, May 29	9	86
Sale 2, July 10	15		150
Purchase 4, Sept. 10	8	96
Sale 3, Oct. 15	12		150

Ein uses a perpetual inventory system. All purchases and sales were for cash.

1. Prepare the journal entries to record these transactions assuming Ein chooses to use the FIFO method.

2. Conceptual Connection: Which method would result in the lowest amount paid for taxes?

Answer 1

	Ans 1.
	Ein Company
Date	Account Title	Dr $	Cr $
Feb 15.2019.	Inventory	432
	Cash		432
Mar 22.2019.	Inventory	640
	Cash		640
Apr 9.	Sales		1,500
	Cash	1,500
	Cost of Goods Sold	594
	Inventory		594
May 29.2019.	Inventory	774
	Cash		774
Jul 10.2019.	Sales		2,250
	Cash	2,250
	Cost of Goods Sold	1,172
	Inventory		1,172
Sep 10.2019.	Inventory	768
	Cash		768
Oct 15.	Sales		1,800
	Cash	1,800
	Cost of Goods Sold	1,082
	Inventory		1,082

Ans 2.
As the cost of Inventory is on an increasing trend,
using LIFO method will increase the Cost of Goods Sold
and reduce the Taxable income and amount of tax
payable. So LIFO method will result in the lowest Tax
amount.

Inventory working FIFO

	Opening Stock	Purchase	Total Stock	Sales	Closing Stock
Date	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value	Unit	Rate	Value
Feb 1.	9.00	58.00	522	-	-	-	9.00		522	-	-	-	9.00	58.00	522
15-Feb	9.00		522	6.00	72.00	432	15.00		954	-	-	-	15.00	63.60	954
Mar 22.	15.00		954	8.00	80.00	640	23.00		1,594	-	-	-	23.00	69.30	1,594
Apr 9.	23.00		1,594	-	-	-	23.00		1,594	9.00	58.00	522	14.00	76.57	1,072
Apr 9.	14.00		1,072			-	14.00		1,072	1.00	72.00	72	13.00	76.92	1,000
May 29.	13.00		1,000	9.00	86.00	774	22.00		1,774	-	-	-	22.00	80.64	1,774
Jul 10.	22.00		1,774	-	-	-	22.00		1,774	5.00	72.00	360	17.00	83.18	1,414
Jul 10.	17.00		1,414	-	-	-	17.00		ekkarill92 Next > < Previous Related Solutions Running Data began operations on February 1. The company produces GPS watches designed for runners. On... Running Data began operations on February 1. The company produces GPS watches designed for runners. On February 15, the company purchased 1,600 DVD discs to include with each running watch it sells. The DVD is preloaded with product setup information, an instruction manual including video examples, and warranty details. Each disc cost Running Data $7. During February, 500 discs were taken from the raw materials inventory. Of these, 80 were taken by the sales manager to sales meetings with prospective... ABC Company Inc. is a new company that began operations on October 5th, 2019. The following... ABC Company Inc. is a new company that began operations on October 5th, 2019. The following are the only events that have occurred since the company’s inception. REQUIRED: Prepare the Journal Entries, T accounts, Trial Balance as of 12-31-19, Balance Sheet as of 12-31-19 and the Income Statement for the year ended December 31st for ABC Company Inc. Lastly, please prepare the closing entries and the post closing trial balance. 10-05-19    John Smith, Sole Shareholder of ABC Inc, contributed $80,000... ABC Company Inc. is a new company that began operations on October 5th, 2019. The following... ABC Company Inc. is a new company that began operations on October 5th, 2019. The following are the only events that have occurred since the company’s inception. REQUIRED: Prepare the Journal Entries, T accounts, Trial Balance as of 12-31-19, Balance Sheet as of 12-31-19 and the Income Statement for the year ended December 31st for ABC Company Inc. Lastly, please prepare the closing entries and the post closing trial balance. 10-05-19    John Smith, Sole Shareholder of ABC Inc, contributed $80,000... The accounting records of Perkins Inc. show the following data for 2019. Pretax financial income was... The accounting records of Perkins Inc. show the following data for 2019. Pretax financial income was $640,000. Life insurance expense on officers was $16,000. Equipment was acquired in early January for $450,000, straight-line depreciation over 5 year life is used, with no salvage value. For tax purposes, Perkins Inc. used a 40% rate to calculate depreciation. Product warranties were estimated to be $75,000 in 2018. Actual repair and labor costs related to the warranties in 2019 were $15,000 and the... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting... The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD... The following cost and inventory data are taken from the accounting records of a Company for... The following cost and inventory data are taken from the accounting records of a Company for the year just completed: Costs incurred: Direct labor cost ................................................... $140,000 Purchases of raw materials .................................. $236,000 Manufacturing overhead ...................................... $160,000 Advertising expense ............................................. $180,000 Sales salaries ....................................................... $100,000 Depreciation, office equipment ............................ $6,000 Inventories: Beginning the Year End the Year Raw materials ............................ $14,000 $30,000 Work in process .......................... $20,000 $10,000 Finished goods ............................ $40,000 $70,000 Required: 1. Prepare the cost of goods... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Which of the following is true of variable costing? It expenses administrative costs as costs of... Individual Age Gender (Male=1) Family Size Cigarettes/Day Alcohol/Day Total Claims 1 25 1 2 0 3... Festus and Fran have decided to buy a house. The purchase price is $175,000. They have... Financing Deficit Garlington Technologies Inc.'s 2018 financial statements are shown below: Balance Sheet as of December... Tesco is a customer-orientated business. It aims to offer products that provide value for money for... Discuss a movie that focuses on individuals mental illness. 1. What movie did you watch and... So previously in my class I had to write a python program where the user would... ADVERTISEMENT About @ 2020 WizEdu