AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 24,000 units of the company's one product. These units cost $15 each. During the year, 74,000 units were purchased at a cost of $18 each and 81,000 units were sold. Near the end of the fiscal year, management is considering the purchase of an additional 9,500 units at $18. 1. What would be the effect of this purchase on income before income taxes? 2. What would be the effect of this purchase on income before income taxes using FIFO method?

AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 24,000 units of the company's one product. These units cost $15 each. During the year, 74,000 units were purchased at a cost of $18 each and 81,000 units were sold. Near the end of the fiscal year, management is considering the purchase of an additional 9,500 units at $18. 1. What would be the effect of this purchase on income before income taxes? 2. What would be the effect of this purchase on income before income taxes using FIFO method?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Altira Corporation provides the following information related to its inventory during the month of August 2024: August 1 Inventory on hand—2,300 units; cost $6.40 each. August 8 Purchased 11,500 units for $5.80 each. August 14 Sold 9,200 units for $12.30 each. August 18 Purchased 6,900 units for $5.00 each. August 25 Sold 8,200 units for $11.30 each. August 28 Purchased 4,300 units for $5.80 each. August 31 Inventory on hand—7,600 units. 1. Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using the FIFO method.
Monroe Company had a beginning inventory of 355 cans of paint at $12.50 each on January 1 at a cost of $4,437.50. During the year, the following purchases were made: February 15 April 30 July 1 285 cans at $14.50 130 cans at $15.00 120 cans at $15.50 Monroe marks up its goods at 30% on cost. At the end of the year, ending inventory showed 150 units remaining. Calculate the amount of sales assuming a FIFO flow of inventory. Note: Round your intermediate calculations and final answer to the nearest cent. Answer is complete but not entirely correct. Amount of sales s 10,297.50
Marvin Company has a beginning inventory of 13 sets of paints at a cost of $1.90 each. During the year, the store purchased 5 sets at $2.00, 7 sets at $2.60, 7 sets at $2.90, and 11 sets at $3.40. By the end of the year, 28 sets were sold. Calculate the number of paint sets in ending inventory. Number of paint sets = 15 Calculate the cost of ending inventory under LIFO, FIFO, and the weighted average methods. Note: Round your answers to the nearest cent. ost of ending inventory under LIFO $28.70selected answer correct Cost of ending inventory under FIFO $49.00selected answer correct Cost of ending inventory under Weighted Average $ Please answer weighted average question.
Air Force Surplus began July 2018 with 100 stoves that cost $10 each. During the month, the company made the following purchases at cost: (Click the icon to view the purchases.) The company sold 300 stoves, and at July 31, the ending inventory consisted of 70 stoves. The sales price of each stove was $48. Read the requirements. Requirement 1. Determine the cost of goods sold and ending inventory amounts for July under the average-cost, FIFO, and LIFO costing methods. Round the average cost per unit to two decimal places, and round all other amounts to the nearest dollar. Number of units Average cost Cost of goods sold Ending inventory Requirements 1. Determine the cost of goods sold and ending inventory amounts for July under the average-cost, FIFO, and LIFO costing methods. Round the average cost per unit to two decimal places, and round all other amounts to the nearest dollar. 2. Explain why cost of goods sold is highest under LIFO. Be specific. 3. Prepare the Air Force Surplus…
Traylor Corporation began the year with three items in beginning inventory, each costing $5. During the year Traylor purchased five more items at a cost of $6 each and then two more items at a cost of $7 each. Traylor sold eight items for $10 each. If Traylor uses a periodic LIFO system, what would be Traylor’s gross profit for this year? 45 $45 $80 $80 $51 $51 $36
In 2021, the BowWow Company purchased 17,970 units from its supplier at a cost of $10.00 per unit. BowWow sold 16,230 units of its product in 2021 at a price of $20.00 per unit. BowWow began 2021 with $995,910 in inventory (inventory is carried at a cost of $10.00 per unit). Using this information, compute BowWow's gross profit for 2021. Record your answer rounded to the nearest dollar. Do not include a dollar sign or commas in your answer. For example, record $1,234,567.89 as 1234568. Your Answer:
The Quartz Company has been taking a physical inventory every quarter in order to prepare its quarterly financial statement. The management is interested to know if they have some alternative to find an efficient way of determining the cost of ending inventory for its quarterly reports. You have been given the following information abased on which you are supposed to suggest the management something that will fulfil the requirements. The Quartz Company Partial Income Statement For the year ended Dec 31, 2020 Net Sales $655,000 CGS: Beginning Inventory 80000 Purchases, Net 575000 COGAS…
Ashavinbhai
During the year, Wright Company sells 535 remote-control airplanes for $120 each. The company has the following inventory purchase transactions for the year. Date Transaction Number of Units Unit Cost Total Cost January 1 Beginning inventory 40 $65 $2,600 May 5 Purchase 285 68 19,380 November 3 Purchase 235 73 17,155 560 $39,135 Calculate ending inventory and cost of goods sold for the year, assuming the company uses LIFO.
Wasatch Outdoor Products has a beginning inventory of 12 backpacks at a cost of $220 each. During the year, the company purchased 10 backpacks at $225, 12 at $230, and 25 at $232. At the end of the year, the company had 8 backpacks left. Calculate the cost of ending inventory using these methods: (a) weighted average, (b) FIFO, and (c) LIFO.