Question
In: Accounting
QP Corp. sold 5,320 units of its product at $46.80 per unit in year 2016 and...
QP Corp. sold 5,320 units of its product at $46.80 per unit in year 2016 and incurred operating expenses of $7.80 per unit in selling the units. It began the year with 780 units in inventory and made successive purchases of its product as follows.
Jan. 1 Beginning inventory 780 units @ $19.80 per unit
Feb. 20 Purchase 1,680 units @ $20.80 per unit
May 16 Purchase 880 units @ $21.80 per unit
Oct. 3 Purchase 580 units @ $22.80 per unit
Dec. 11 Purchase 3,480 units @ $23.80 per unit
Total 7,400 Required:
1. Prepare comparative income statements for the three inventory costing methods of FIFO, LIFO, and weighted average which includes a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system, and its income tax rate is 30%. (Round your average cost per unit to 2 decimal places.)
| Fifo | Lifo | Weighted Average | |
| sales | |||
|
cost of goods sold: |
|||
| Inventory dec 31, 2015 | |||
| cost of purchases | |||
| cost of goods avaiable for sale | |||
| Less: Inventory dec 31, 2016 | |||
| Costs of Goods | |||
| Gross profit | |||
| Operating expenses | |||
| Income before taxes | |||
| Income taxes expense |
Net income
Solutions
Expert Solution
| Ending inentory | |||||||||
| Units | |||||||||
| Beginning inventory | 780 | ||||||||
| Add:Purchases (1680+880+580+3480) | 6620 | ||||||||
| Goods available for sale | 7400 | ||||||||
| Less:Units sold | 5320 | ||||||||
| Ending inventory | 2080 | ||||||||
| FIFO: | |||||||||
| Goods purchased first are sold first.Hene ending inventory consist of latest purchase | |||||||||
| Value of inventory from latest purchase | |||||||||
| 2080 units @ 23.80 | 49504 | ||||||||
| LIFO: | |||||||||
| Goods purchased last are sold first.Hene ending inventory consist of old purchase | |||||||||
| Value of inventory from first purchase | |||||||||
| 780 units @ 19.80 | 15444 | ||||||||
| 1300 units @ 20.80 | 27040 | ||||||||
| Total | 42484 | ||||||||
| Weighted average: | |||||||||
| Units | Rate | Cost | |||||||
| Beginning inventory | 780 | 19.8 | 15444 | ||||||
| Add:Purchases | |||||||||
| Feb.20 | 1680 | 20.8 | 34944 | ||||||
| May.16 | 880 | 21.8 | 19184 | ||||||
| Oct.3 | 580 | 22.8 | 13224 | ||||||
| Dec.11 | 3480 | 23.8 | 82824 | ||||||
| 7400 | 165620 | ||||||||
| Weighted average cost per unit=165620/7400=$ 22.38 | |||||||||
| Value of inventory=2080*22.38=46550 | |||||||||
| FIFO | LIFO | Weighted Average |
|||||||
| Sales (a) | (5320*46.80) | 248976 | 248976 | 248976 | |||||
| Cost of goods sold: | |||||||||
| Inventory , Dec 31,2015 (780*19.8) | 15444 | 15444 | 15444 | ||||||
| Cost of purchase | 150176 | 150176 | 150176 | ||||||
| cost of goods avaiable for sale | 165620 | 165620 | 165620 | ||||||
| Less: Inventory dec 31, 2016 | 49504 | 42484 | 46550 | ||||||
| Costs of Goods (b) | 116116 | 123136 | 119070 | ||||||
| Gross profit (a)-(b) | 132860 | 125840 | 129906 | ||||||
| Operating expenses | (5320*7.8) | 41496 | 41496 | 41496 | |||||
| Income before taxes | 91364 | 84344 | 88410 | ||||||
| Income taxes expense @ 30% | 27409 | 25303 | 26523 | ||||||
| Net income | 63955 | 59041 | 61887 | ||||||
ekkarill92 answered 8 months agoRelated Solutions
QP Corp. sold 5,470 units of its product at $45.30 per unit during the year and...
QP Corp. sold 5,470 units of its product at $45.30 per unit
during the year and incurred operating expenses of $6.30 per unit
in selling the units. It began the year with 630 units in inventory
and made successive purchases of its product as follows.
Jan.
1
Beginning inventory
630
units @ $18.30 per unit
Feb.
20
Purchase
1,530
units @ $19.30 per unit
May
16
Purchase
730
units @ $20.30 per unit
Oct.
3
Purchase
430
units @ $21.30...
QP Corp. sold 5,470 units of its product at $45.30 per unit during the year and...
QP Corp. sold 5,470 units of its product at $45.30 per unit
during the year and incurred operating expenses of $6.30 per unit
in selling the units. It began the year with 630 units in inventory
and made successive purchases of its product as follows.
Jan.
1
Beginning inventory
630
units @ $18.30 per unit
Feb.
20
Purchase
1,530
units @ $19.30 per unit
May
16
Purchase
730
units @ $20.30 per unit
Oct.
3
Purchase
430
units @ $21.30...
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