3a. Castillo Corporation has maintained a periodic inventory system and used the LIFO costflow alternative for years. The earliest layers of LIFO inventory date back 15 years. Thecompany had beginning inventory at January 1, 2021, consisting of three layers, starting withthe oldest layer of 150,000 units.UNITSUNIT COSTTOTAL COST$10$1,500,000960,000150,00080,0001215,00020300,000245,000$2.760,000During the year, an involuntary reduction of inventory occurred. Ending inventory dropped to120,000 units. The current replacement value of those units is $35 per unit. The appropriate taxrate is 27%.3a. Provide two examples of possible involuntary reductions of inventory. Provide twoexamples of voluntary reductions of inventory.3b. Determine the after-tax change in income. Show labelled work.3c. What needs to be disclosed in the notes and why?On January 1, 2018, Toups Inc. changed from FIFO to LIFO for income tax and externalreporting purposes. At that date, the beginning FIFO inventory was $75,000. See the followinginformation from Toups's records.Ending Inventory at FIFO$ 75,00088,000100,00075,00088,000YearIndex20181.0020191.1020201.1520211.2020221.253d. Prepare a table similar to the notes to show how you arrived at ending inventory at dollarvalue LIFO.3e. Write the necessary adjusting entries to adjust the LIFO Reserve for each year.

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Description: 3a. Castillo Corporation has maintained a periodic inventory system and used the LIFO costflow alternative for years. The earliest layers of LIFO inventory date back 15 years. Thecompany had beginning inventory at January 1, 2021, consisting of thre

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. Castillo Corporation has maintained a periodic inventory system and used the LI w alternative for years. The earliest layers of LIFO inventory date back 15 years. mpany had beginning inventory at January 1, 2021, consisting of three layers, sta e oldest layer of 150,000 units. NITS 150,000 80,000 15,000 245.000 UNIT COST $10 12 20 TOTAL COST $1,500,000 960,000 300,000 $2.760,000 ring the year, an involuntary reduction of inventory occurred. Ending inventory dr 0.000 units. The current replacement value of those units is $35 per unit. The ann

. Castillo Corporation has maintained a periodic inventory system and used the LI w alternative for years. The earliest layers of LIFO inventory date back 15 years. mpany had beginning inventory at January 1, 2021, consisting of three layers, sta e oldest layer of 150,000 units. NITS 150,000 80,000 15,000 245.000 UNIT COST $10 12 20 TOTAL COST $1,500,000 960,000 300,000 $2.760,000 ring the year, an involuntary reduction of inventory occurred. Ending inventory dr 0.000 units. The current replacement value of those units is $35 per unit. The ann

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Crane Company uses a periodic inventory system and the average cost method. At December 31, 2025, the following information has been compiled for its finished goods inventory: Replacement value Cost Expected selling price Normal profit margin Selling costs $13100 $14900 $15380 15% 5% of expected selling price After applying LCNRV, Crane, which uses the cost of goods sold method to record inventory write-downs, will make an entry O crediting Inventory for $480. O debiting Cost of Goods Sold for $289. O crediting Cost of Goods Sold for $1800. O debiting Inventory Loss for $480.
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13. Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost method. Data for 2021 are as follows: Beginning inventory, FIFO (5,000 units @ $26) $ 130,000 Purchases: 5,000 units @ $31 $ 155,000 5,000 units @ $35 175,000 330,000 Cost of goods available for sale $ 460,000 Sales for 2021 (5,000 units @ $62) $ 310,000 Additional Information: The company's effective income tax rate is 25% for all years. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $120,000. 10,000 units remained in inventory at the end of 2021. Required:1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.2. What is the effect of the change in methods on 2021 net income?
Sherman Electric uses a pericdic inventory system. The beginning nventory of a particular product, and the purchases during the curent year, were as follows: $105 = $ 6.300 Beginning inventory Purchase..n Purchase 60 units @ 30 units @ 90 units @ 20 units @ 200 units Jan. 3115- 3125 S135 = 3,450 11,250 2.700 $23.700 Mar. Aug. 11 Oet. 23 Purchase Total available for sale At December 31. the ending inventory of this product consisted of 65 units. Using periodic costing procedures, determine (1) cost of the year-end inventory and. (2) cost of goods sold relating to this product under each of the following flow assumptions: (1) Inventory at Dec. 31 (2) Cast of Goods Sold Average cost First-in. first-out Last-in, first-out
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Inventories (Cost Flow under FIFO, LIFO, and AVCO):Problem:Atkinson Inc. had the following inventory flow in March 2020. It follows a perpetual system of cost flow. Date Description Unit and Rate March 01 Beginning inventory 160 units @ $16 each 02 Purchase 380 units @ $17 each 08 Sales 200 units @ $56 each 12 Purchase 100 units @ $19 each 20 Sales 250 units @ $62 each 22 Sales 50 units @ $70 each 26 Purchase 400 units @ $18 each 29 Sales 350 units @ $65 each Prepare inventory cost flow schedules by following FIFO, LIFO, and AVCO. Also, show a condensed Income Statement assuming Selling and Distribution cost to be $16,000 andAdministrative Expense as $12,000. Consider an Income Tax Rate of 30%.
During the year, Wright Company sells 330 remote-control airplanes for $110 each. The company has the following inventory purchase transactions for the year. DateTransactionNumber of UnitsUnit CostTotal CostJan. 1Beginning inventory 60 $73 $4,380 May. 5Purchase 205 76 15,580 Nov. 3Purchase 110 81 8,910 375 $28,870 Calculate ending inventory and cost of goods sold for the year, assuming the company uses LIFO.
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