Question

In: Accounting

Shanghai Company sells electronic equipment that it acquires from the US. During the year 2014, the...

Shanghai Company sells electronic equipment that it acquires from the US. During the year 2014, the inventory records reflected the following:

Units

Unit cost

Beg. Inventory

40

$60

Purchase 1

50

$70

Purchase 2

35

$75

At the end of 2014, 45 units are still on hand at the end of year 2014. Shanghai sell its electronic equipment at a fixed price of $100 each. Required:

  1. Determine the cost of goods sold and the cost of ending inventory assuming the company uses FIFO.

  1. Determine the amount of gross profit that would be reported for the year.

  1. Given the price trend shown above, which valuation method (FIFO, LIFO, or Weighted Average) will result in the lowest gross profit?

  1. Given the price trend shown above, which valuation method (FIFO, LIFO, or Weighted Average) will result in a better matching of Revenues & Cost of goods sold? Explain.

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Monroe Company rents and sells electronic equipment. During September, Monroe engaged in the transactions described below....
Monroe Company rents and sells electronic equipment. During September, Monroe engaged in the transactions described below. Sept. 5 Purchased a Chevrolet truck for $42,500 cash. 8 Purchased inventory for $4,400 on account. 10 Purchased $950 of office supplies on credit. 11 Rented sound equipment to a traveling stage play for $12,800. The producer of the play paid for the service at the time it was provided. 12 Rented sound equipment and lights to a local student organization for a school...
Suppose Bonnet Company acquires some equipment from Grenoble Company in exchange for issuance of 13,000 shares...
Suppose Bonnet Company acquires some equipment from Grenoble Company in exchange for issuance of 13,000 shares of Bonnet's common stock. The equipment was carried on Grenoble's book at the $550,000 original cost less accumulated depreciation of $250,000. Bonnet's stock actively trades and has a current market value of $50 per share. Its par value is $9 per share. Requirements 1 By using the balance sheet equation, show the effects of the transaction of the accounts of Bonnet company and Grenoble...
Maxwell Company manufactures and sells a single product. The following costs were incurred during 2014, the company’s first year of operations:
3.        Variable and Absorption Costing Follow the directions below and answer the following problem. Maxwell Company manufactures and sells a single product. The following costs were incurred during 2014, the company’s first year of operations:                     Variable Costs per Unit:                               Production:                                        Direct Materials                                            $16                                        Direct Labor                                                     8                                        Variable Manufacturing Overhead                  2                               Selling and Administrative                                        4                     Fixed Costs per Year:                               Manufacturing Overhead                            $ 140,000                               Selling and Administrative                             110,000 During 2014, the company produced 20,000 units and sold 18,000 units. The selling price...
Morgan Company acquires 40% of the voting stock of Kirk Corporation on January 1, 2014, for...
Morgan Company acquires 40% of the voting stock of Kirk Corporation on January 1, 2014, for $60,000,000, and treats it as an equity method investment. At the date of Morgan’s investment, the fair values of Kirk’s net assets differed from book values as follows:                                                                                              Book value                                     Fair value                                                                                                      Merchandise (sold during 2014)                                   $ 5,000,000                                     $ 8,000,000 Buildings and equipment (20-year life)                        30,000,000                                       40,000,000 Intangible assets (4-year life)                                           0                                                         10,000,000 Kirk reports total net income of $20,000,000 for the...
General, Inc. leases equipment to different types of businesses. The company generally acquires the equipment and...
General, Inc. leases equipment to different types of businesses. The company generally acquires the equipment and leases the equipment to its customers under long-term sales-type leases. General’s implicit interest in the lease arrangements is 10% annual rate. General leased its machine that it purchased for $30,900 to a lessee, Oscar Company on January 1, 2018. The lease contract specified annual payments of $8,000 beginning January 1, 2018, the beginning of the lease, and each January 1 through 2020 (three-year lease...
Contribution Margin Analysis—Sales Select Audio Inc. sells electronic equipment. Management decided early in the year to...
Contribution Margin Analysis—Sales Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of the speakers in order to increase sales volume. As a result, for the year ended December 31, the sales increased by $23,500 from the planned level of $1,228,500. The following information is available from the accounting records for the year ended December 31. Actual Planned Increase or (Decrease) Sales $1,252,000 $1,228,500 $23,500 Number of units sold 31,300 27,300 4,000 Sales...
Contribution Margin Analysis—Sales Select Audio Inc. sells electronic equipment. Management decided early in the year to...
Contribution Margin Analysis—Sales Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of the speakers in order to increase sales volume. As a result, for the year ended December 31, the sales increased by $19,100 from the planned level of $1,025,100. The following information is available from the accounting records for the year ended December 31. Actual Planned Increase or (Decrease) Sales $1,044,200 $1,025,100 $19,100 Number of units sold 22,700 20,100 2,600 Sales...
Contribution Margin Analysis—Sales Select Audio Inc. sells electronic equipment. Management decided early in the year to...
Contribution Margin Analysis—Sales Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of the speakers in order to increase sales volume. As a result, for the year ended December 31, the sales increased by $31,875 from the planned level of $1,048,125. The following information is available from the accounting records for the year ended December 31. Actual Planned Increase or (Decrease) Sales $1,080,000 $1,048,125 $31,875 Number of units sold 36,000 32,250 3,750 Sales...
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common...
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired. Demers earns income and pays dividends as follows: 2014 2015 2016...
Manufacturing Company purchased a piece of equipment for $1,520,000 at the beginning of 2014. The equipment...
Manufacturing Company purchased a piece of equipment for $1,520,000 at the beginning of 2014. The equipment has an estimated useful life of four years and an estimated residual value of $150,000. The equipment should produce 20,000 units. It produced in each year: 4,000 in 2014; 8,000 in 2015; 5,000 in 2016; and 3,000 in 2017. Required (10 points): a. Compute the annual depreciation expense, accumulated depreciation and carrying value for the equipment for each year assuming the following depreciation methods...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT