Part 3:10. Calculate the five critical subtotals in the multistep income statementbased on the information provided in this table:SalesSales returnsSales discountsCost of Goods SoldTotal OperatingExpensesInterest IncomeInterest ExpenseIncome Tax Expensea. Net Salesb. Gross Profitc. Income From Operationsd. Income Before Taxese. Net Income11. Fill in the blanks.If costs are rising, then......a) LIFO COGS is_b) LIFO ending inventory isinventory780,00015,0002,000325,000215,000d) Ending inventory ise) Net Income isf) Ending Retained Earnings areg) Stockholder's Equity ish) Assets are11,00020,00040,000Amount:(greater or less than) FIFO COGS(greater or less than) FIFO ending(greater or lessc) Net Income for a company using LIFO will bethan) a company that uses FIFOIf COGS is understated: (Fill in with overstated or understated): 8:36Chegg Home Expert Q&AChapter Summary Assignment #3 (Ch 5 & 6) D2L quiz questions will be asked inclass based on your completion of this preparation guide. Example in class question: What isthe debit account in Question 2? You will not have time to complete this guide in class! Youare required to handwrite your answers to this assignment.My answersPart 1: Prepare Bluth Co.'s journal entries for each of the following transactions. Assume thata perpetual inventory method is used.Recording Purchases of Merchandise1. Bluth Co. purchases $75,000 of inventory on account, terms 2/10 net30 from Sitwell Enterprise.2. Bluth Co. returns $5,000 of inventory to Sitwell Enterprise from theinitial purchase.33. Bluth Co. pays the balance owed to Sitwell Enterprise, taking thediscount.Recording Sales of Merchandise (new scenario)4. Bluth Co. sells merchandise on account for $29,000 (terms 3/10 net30) to Franklin Inc. The merchandise had cost Bluth Co. $15,500.Show Transcribed TextĆBeginning inventory (1/1/2023)Purchase # 1: (3/2/23)Purchase #2: (7/15/23)Purchase #3: (11/31/23)5. Franklin Inc. returns $5,500 of the merchandise to Bluth Co. Assumethis returned merchandise had cost Bluth Co. $2,200.6. Franklin Inc. pays Bluth Co. the balance owed within 10 days of thesale.Skip questionPart 2: During 2023, Waystar Royco sold 31,000 units of its product. The following units wereon hand or purchased during the year:Total Available for SaleLess SoldEnding InventoryAverage Cost per unit =Ending Inventory:0.06 VODKB/S LTE2Units7,00012,00020,00011,00050,000Start answering|||Required: In the table above, fill in the number of units sold and the number of units in EndingInventory. Calculate ending inventory and cost of goods sold for the next 3 questions.7. If the company used the FIFO method, what is the value of endinginventory and cost of goods sold?Ending Inventory:Cost of Goods Sold:Cost per Total Cost$14.50$14.90$14.00$13.758. If the company used the LIFO method, what is the value of endinginventory and cost of goods sold?Ending Inventory:Cost of Goods Sold:9. If the company used the average cost method, what is the value of endinginventory and cost of goods sold?Please round your calculated average cost per unit to 4 decimals (example -$18.7910)$101,500$178,800$280,000$151,250$711,550ExitCost of Goods Sold:4G33

10. a. Net Sales = Sales - Sales returns - Sales discounts= 780,000 - 15,000 - 2,000= 763,000 b.…

11. Fill in the blanks. If costs are rising, then...... a) LIFO COGS is b) LIFO ending inventory is inventory (greater or less than) FIFO COGS (greater or less than) FIFO ending (greater or less c) Net Income for a company using LIFO will be than) a company that uses FIFO If COGS is understated: (Fill in with overstated or understated): d) Ending inventory is e) Net Income is f) Ending Retained Earnings are g) Stockholder's Equity is h) Assets are

11. Fill in the blanks. If costs are rising, then...... a) LIFO COGS is b) LIFO ending inventory is inventory (greater or less than) FIFO COGS (greater or less than) FIFO ending (greater or less c) Net Income for a company using LIFO will be than) a company that uses FIFO If COGS is understated: (Fill in with overstated or understated): d) Ending inventory is e) Net Income is f) Ending Retained Earnings are g) Stockholder's Equity is h) Assets are

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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What is the ending inventory value?
When inventory costs rise and inventory quantities are not decreasing, what does the LIFO produces?
Which of the following statements Is/are true? Multiple Cholce In a period of rising costs and stable inventory levels, using the FIFO method leads to a higher taxable income and higher net income compared to the LIFO method. All of the other answer choices are true. In a period of falling costs and stable inventory levels, cost of goods sold is the same under LIFO and FIFO. In a period of rising costs and stable inventory levels, using the LIFO method leads to a lower taxable income and higher net income compared to the FIFO method.
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Companies can use various methods to determine the cost of inventory, including FIFO, LIFO, and average cost. In a period in which the cost of inventory is rising, which of the following statements is true? The LIFO method will result in the lowest income tax expense. The LIFO method will result in the highest inventory balance at year-end. The average cost method will result in the highest net income. The LIFO method will result in the lowest cost of goods sold. The average cost method will result in the lowest inventory balance at year-end. The average cost method will result in the highest inventory balance at year-end. The FIFO method will result in the lowest net income. None of the listed choices are correct.
During periods when costs are rising and inventory quantities are stable, cost of goods sold will be: Multiple Choice Lower under average cost than LIFO. Higher under FIFO than average cost. Lower under LIFO than FIFO. Higher under FIFO than LIFO.
During periods of increasing costs, the use of the FIF0 method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method. True False
Lower of cost or market: Multiple Choice Records only an increase in inventory value. Is only applicable to companies using LIFO. Reports all inventory items at full cost Can be applied to each individual item, major categories of items, or the whole inventory- Is only applicable to companies using FIFO.
U Company and V Company are identical in all the expects, except the fact the U Company follows FIFO and V Company follows LIFO. If the inventory costs are rising, U Company's inventory turnover ratio and gross profit compared to V Company will be: Lower Higher Lower Lower Higher Higher Higher Lower
In order to get the lowest profits possible in periods of rising inventory costs, the company should use which of the following inventory costing methods? Group of answer choices Average cost Specific identification FIFO LIFO
Which one of the following statements is true? a. Income manipulation is difficult under LIFO.b. Accounting principles do not require that the inventory cost flow approximate the physical flow of goods.c. Companies may use LIFO for tax purposes and FIFO in the financial statements.d. In periods of declining prices, LIFO will result in the payment of less income taxes.
What is the purpose of the lower of cost or net realizable value rule? What would happen if a company was to report their inventory at replacement cost?