1. Teel Distribution Co. has determined its December 31, 2007 inventory on a FIFObasis at $250,000. Information pertaining to that inventory follows:$255,000|Estimated selling priceEstimated cost of disposal/completion10,000Normal profit marginCurrent replacement cost30,000225,000Teel records losses that result from applying the lower-of-cost-or-market rule. AtDecember 31, 2007, the loss that Teel should recognize isb. $5,000c. $20,000d. $25,000

The Inventory valuation and loss on valuation has been computed as above.

Answered: 1. Teel Distribution Co. has determined…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kiko Company has the policy of valuing inventory at the lower of cost and net realizable value using the allowance method. Allowance to Reduce Inventory to NRV account at December 31, 2021 before adjustment is P86,000. Analysis of the net realizable value and costs of their products on December 31, 2021 revealed a valuation at the lower of cost and net realizable value of P1,200,000 applied to the individual products. The total cost of its products on that date is P1,300,000.How much is the loss from decline in NRV that Kiko Company should report in profit or loss for the year ended December 31, 2021?
Power Company's ending inventory is understated by P7,000. The effects of this error in the current year's cost of goods sold and net income, respectively are.
A3
During 20x3, Pryor Company changed its inventory method from the LIFO to FIFO. The beginning inventory under FIFO is $20,000 higher than under LIFO. Prepare the journal entry to record this accounting change. Ignore income tax.
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If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any? If no entry is required, select "None" and leave the amount boxes blank. Balance Sheet: Merchandise Inventory $4 Current Assets Total Assets Retained Earnings Income Statement: Cost of Goods Sold Gross Profit/Gross Margin Net Income
The following information is presented for Marigold Corporation. The net income figures were computed without knowledge of the errors in ending inventory. Assume that there was no error in the 2016 ending inventory. Year Net Incomeper Books Error in EndingInventory 2017 $ 180,000 Overstated $ 23,000 2018 93,000 Overstated 35,000 2019 108,000 No error - 2020 218,000 Understated 6,200 2021 97,000 Understated 19,500 Prepare a worksheet to show the adjusted net income figure for each year from 2017 to 2021 after taking into account the inventory
6. On January 1, 2011, Folk Company changed from the average cost method to the FIFO method to account for its inventory. Ending inventory for each method was given below. Folk Company accrues tax expense on December 31 of each year and pays the tax in April of the following year. The income tax rate is 30%. What is the net income to be reported in 2011 after the change to the FIFO inventory method? a. 1,610,000 b. 2,300,000 c. 1,750,000 d. 1,890,000
Poe, Co. uses LIFO for its inventory valuation. The original cost of Item #BB-8, the only inventory item of Poe, was $12,000. The current selling price and replacement cost are $13,500 and $9,500, respectively. Costs to sell are estimated to be $2,700. The normal profit margin is 10% of the original cost.
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The condensed Income statement of Chris Co. for the year ended December 31 , 2021 presented below: Chris Co. Income Statement For the Year Ended December 31, 2021 Sales 1,000,000 Cost of goods sold 600,000 400,000 Gross income Operating expenses 150,000 250,000 Net income An examination of the company records shows the following errors must be corrected : • December 31 , 2021 inventory is understated by: P31,000. Accrued expenses of P4,000 and prepaid expenses of P6,000 were not recognized in the company's books . The company employs the expense method in accounting for prepayments. • Sales of P5,000 were not recorded until January 2022 , although the goods were shipped in December 31, 2021, and were excluded from the December 31 physical inventory. Purchases of P30,000 made in December 31 , 2021, were not recorded although the goods were received and properly included in the December 31, physical inventory. A machine was sold for P10,000 on July 1 2021, and the proceeds were credited…

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