Exercise 6-4 Income effects of inventory methods L.O. A1
Park Company reported the following March purchases and sales data for its only product.
Date |
Activities |
Units Acquired at Cost |
Units Sold at Retail |
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1 |
Beginning inventory |
150 |
units |
@ $7.00 |
= |
$ |
1,050 |
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10 |
Sales |
90 |
units |
@$15 |
||||||||||||
20 |
Purchase |
220 |
units |
@ $6.00 |
= |
1,320 |
||||||||||
25 |
Sales |
145 |
units |
@$15 |
||||||||||||
30 |
Purchase |
90 |
units |
@ $5.00 |
= |
450 |
||||||||||
Totals |
460 |
units |
$ |
2,820 |
235 |
units |
Park uses a perpetual inventory system. For specific identification, ending inventory consists of 225 units, where 90 are from the March 30 purchase, 80 are from the March 20 purchase, and 55 are from beginning inventory.
Complete comparative income statements for the month of March for Park Company for the four inventory methods. Assume expenses are $1,600, and that the applicable income tax rate is 30%.(Round per unit costs to three decimal places. Round your answers to the nearest dollar amounts. Input all amounts as positive values. Omit the “$” sign in your response.)
PARK COMPANY |
||||
Specific |
Weighted |
FIFO |
LIFO |
|
Sales |
$ |
$ |
$ |
$ |
Cost of goods sold |
||||
Gross profit |
||||
Expenses |
||||
Income before taxes |
||||
Income tax expense |
||||
Net income |
$ |
$ |
$ |
$ |
Which method yields the highest net income?
LIFO
Weighted average
FIFO
Specific identification
Does net income using weighted average fall between that using FIFO and LIFO?
Yes
No
If costs were rising instead of falling, which method would yield the highest net income?
LIFO
Weighted average
FIFO
Specific identification
Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
Required: Compute cost of goods available for sale and the number of units available for sale. (Omit the “$” sign in your response.)
Compute the number of units in ending inventory.
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and(d)specific identification. For specific identification, the March 9 sale consisted of 40 units from beginning inventory and 170 units from the March 5 purchase; the March 29 sale consisted of 20 units from the March 18 purchase and 60 units from the March 25 purchase. (Due to rounding, the sum of Cost of Goods Sold and Ending inventory may not equal the Cost of Good available for sales. Round your weighted average cost to 3 decimal places. Round your final answers to nearest whole dollar amount. Omit the “$” sign in your response.)
Compute gross profit earned by the company for each of the four costing methods. (Round your per unit costs to 3 decimal places and inventory balances and final answer to the nearest dollar amount. Omit the “$” sign in your response.)
Problem 6-4A Analysis of inventory errors L.O. A2
(b)
(c)
(d)
What is the error in total net income for the combined three-year period resulting from the inventory errors(Leave no cells blank – be certain to enter “0” wherever required. Input your answer as a positive value. Omit the “$” sign in your response.)
Problem 6-5AA Alternative cost flows-periodic L.O. P3 [The following information applies to the questions displayed below.]
eBook Linkreferences 7. value: Problem 6-5AA Part 1
check my workreferences 8. value: Problem 6-5AA Part 2
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