Bettencourt Clothing Corporation uses a periodic inventory system and the LIFO cost method. The company began 2024 with the following inventory layers (listed in chronological order of acquisition): 7,000 units @ $11 per unit 10,000 units @ $13 per unit Beginning inventory $ 77,000 130,000 $ 207,000 During 2024, 22,000 units were purchased for $16 per unit. Sales for the year totaled 34,000 units at various prices, leaving 5,000 units in ending inventory. Required: 1. Calculate cost of goods sold for 2024. 2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2024 financial statements, assuming the amount is material. Assume an income tax rate of 25%.
Bettencourt Clothing Corporation uses a periodic inventory system and the LIFO cost method. The company began 2024 with the following inventory layers (listed in chronological order of acquisition): 7,000 units @ $11 per unit 10,000 units @ $13 per unit Beginning inventory $ 77,000 130,000 $ 207,000 During 2024, 22,000 units were purchased for $16 per unit. Sales for the year totaled 34,000 units at various prices, leaving 5,000 units in ending inventory. Required: 1. Calculate cost of goods sold for 2024. 2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2024 financial statements, assuming the amount is material. Assume an income tax rate of 25%.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Bettencourt Clothing Corporation uses a periodic inventory system and the LIFO cost method. The company began 2024 with the
following inventory layers (listed in chronological order of acquisition):
7,000 units @ $11 per unit
10,000 units @ $13 per unit
Beginning inventory
$ 77,000
130,000
$ 207,000
During 2024, 22,000 units were purchased for $16 per unit. Sales for the year totaled 34,000 units at various prices, leaving 5,000
units in ending inventory.
Required:
1. Calculate cost of goods sold for 2024.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2024 financial
statements, assuming the amount is material. Assume an income tax rate of 25%.
Cost of goods sold
LIFO liquidation profit
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