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Question 1: Carmel Inc. started the business year with 200 units of inventory that cost a...

Question 1:

Carmel Inc. started the business year with 200 units of inventory that cost a total amount of $34,000 (all units were purchased for the same price).
During the year, the company entered into the following transactions:
1 .Purchasing on Feb 1st an additional 200 units for the price of 180 each.

2 .Purchasing on April 15th an additional 70 units for the price of 210 each.
3 .Purchasing on November 1st an additional 110 units for the price of 260 each.
4 .Selling on October 1st, 450 units for the total amount of $2,000,000.
Required:
A. Compute the cost of ending inventory and COGS assuming FIFO (Using the periodic or the perpetual method.
B. Compute the cost of ending inventory and COGS assuming LIFO and using the periodic method.
C. Compute the cost of ending inventory and COGS assuming LIFO and using the perpetual method.
D. Compute the cost of ending inventory and COGS assuming Average Cost and the periodic method.
E. When prices are rising, which method will result in:
1. Highest gross profit?
2. A more accurate (i.e., closer to replacement cost) ending balance of Inventory on the balance sheet?
3. Highest pre-tax earnings, which lead to higher tax payments?
4. A more accurate (i.e., closer to economic profit) net income?

Question 2:
Using the following information, compute the amount of the ending Inventory.

Sales $620000
Beginning inventory $13000

Purchases (net) $350000

Net income $187000
Operating expenses $118000

Other revenues and exp. $0

a. $ 48,000 b. $188,000 c. $ 70,000 d. $ 58,000 e. $337,000

Part A - Show your calculations.
Part B - Choose the best answer from a to e.

Question 3:
Using the following information, compute the gross profit.

Sales $172,000
Beginning inventory $7,000
Purchases $79,000
Purchase discounts $2,500
Purchase returns & allowances $1,300

Freight-in $2,500
Ending inventory $32,700

a. $122,500 b. $127,000 c. $ 87,300 d. $139,300 e. $120,000

Part A - Show your calculations.
Part B - Choose the best answer from a to e.

Expert Solution

The answer for Question 1 and Question 2 is attached in below picture

If you have any doubt or the answer provided by me is not as per your required format, feel free to send me a comment before rating my answer, i will clarify your doubt.

ekkarill92 answered 1 year ago

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