Choose best option and write short explanation. (Account) Cherry Falls Inc. (CFI) uses the perpetual method ofaccounting for inventory, and the gross method forrecording sales discounts. CFI prepares monthlyfinancial statements. Instead of the previous entry,assume the circumstance. CFI is preparing financialstatements at 9/30. The inventory cost atSeptember 30 is $1,200. Because the Red Sox areNOT in the World Series, determines that the NetRealizable Value of the hats is only $1,000. What isthe effect on net income for this transaction?a. No effect on net incomeb. Decrease net incomec. Increase net income

Detailed Explanation of the Scenario:Cherry Falls Inc. (CFI) prepares financial statements monthly…

Answered: Cherry Falls Inc. (CFI) uses the…

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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Davis Inc. uses the gross method for recording purchase and sales discounts. They had the following transactions occur in October of 2022. Oct 1: Purchased inventory costing $5000, terms 2/10, n/30. Oct 8: Paid for the inventory purchased on Oct 1. Oct 18: Returned one-half of the inventory purchased on Oct 1 back to the supplier. The supplier will apply the return against future payables for Davis. Record the October transactions in the general journal assuming Davis Inc. uses the periodic and perpetual inventory.
Marigold Inc. uses LIFO inventory costing. At January 1, 2025, inventory was $211,649 at both cost and market value. At December 31, 2025, the inventory was $287,776 at cost and $269,210 at market value. Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method and (b) the loss method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation (a) (b) Cost of Goods Sold Allowance to Reduce Inventory to Market Inventory Loss Debit 18566 18566 Credit 18566 18566
Freedman Company estimates that sales this year of $12,000 will be returned next year and customers will be granted a full refund. Which of the following journal entries would Freedman Company record as part of its year-end adjustments assuming it uses the perpetual inventory system? a.Debit Estimated Returns Inventory for $12,000 and credit Income Summary for $12,000 b.Debit Sales Returns and Allowances for $12,000 and credit Cost of Goods Sold for $12,000 c.Debit Inventory Short and Over for $12,000 and credit Merchandise Inventory for $12,000 d.Debit Sales Returns and Allowances for $12,000 and credit Customer Refunds Payable for $12,000
Prepare financial statements for Drake Company for the year. But first...... Calculate and record the Cost of Goods Sold expense: The ending inventory balance currently shows a $279,000 balance before adjustments. After counting and pricing it using FIFO, only $33,000 remains in inventory. Reduce inventory (credit entry) to its proper balance and adjust the COGS for the inventory that is gone. The income tax rate is 30%. LAccounts payable A Accounts receivable LA Building A Cash E Common stock I Cost of Goods Sold expense SORE Dividends LA Equipment Income tax expense Income tax payable Interest Expense Inventory LA Land Long Term Debt LOhio Sales tax payable ORE Retained earnings- beginning Sales Utilities expense Wages and salaries expense ? 246,000 $14,400 $196,200 ? $57,000 $225,680 $62,500 total debits and credits $3,000 33 $279,000 $53,431 $1,001,211 $250,000 ? $14,000 $96,000 $31,000 $78,000 $1,650 $52,561 $588,000 $1,001,211
Take me to the text Suppose that on November 20, 2021, both Company A and Company B sold inventory with a cost of $38,800. The updated balance of inventory as at November 1 for both companies was $104, 700. Company A uses the perpetual inventory system. Company B uses the periodic inventory system and performs an inventory count at the end of each month. What is the value of inventory as at November 20 for each company? Do not enter dollar signs or commas in the input boxes. Company Inventory System Value of Inventory on November 20 A Perpetual SAnswer B Periodic $Answer
The following selected account data is taken from the records of Reese Industries for 2019. Assume the perpetual inventory system is used. Sales $643,363 Merchandise Inventory 581,620 Sales Discounts 58,030 Interest Expense 3,877 Sales Returns and Allowances 90,232 Interest Revenue 10,268 Cost of Goods Sold 227,598 Rent Expense 15,090 Depreciation Expense-Office Equipment 3,600 Insurance Expense 2,450 Advertising Expense 12,810 Accounts Receivable 102,440 Office Supplies Expense 1,600 Rent Revenue 23,650 Sales Salaries Expense 30,410 Accounts Payable 136,404 Common Stock 59,419 Marketing Expense 33,000 A. Use the data provided to compute net sales for 2019. B. Prepare a simple income statement for the year ended December 31, 2019. Reese Industries
The following selected account data is taken from the records of Reese Industries for 2019. Assume the perpetual inventory system is used. Sales $643,363 Merchandise Inventory 581,620 Sales Discounts 58,030 Interest Expense 3,877 Sales Returns and Allowances 90,232 Interest Revenue 10,268 Cost of Goods Sold 227,598 Rent Expense 15,090 Depreciation Expense-Office Equipment 3,600 Insurance Expense 2,450 Advertising Expense 12,810 Accounts Receivable 102,440 Office Supplies Expense 1,600 Rent Revenue 23,650 Sales Salaries Expense 30,410 Accounts Payable 136,404 Common Stock 59,419 Marketing Expense 33,000 A. Use the data provided to compute net sales for 2019. $ 495,101 B. Prepare a simple income statement for the year ended December 31, 2019. Previous
Bramble Corp. uses the perpetual inventory and the gross method. On March 1, it purchased $ 54000 of inventory, terms 2/10, n/30. On March 3, Bramble returned goods that cost $ 5400. On March 9, Bramble paid the supplier. On March 9, Bramble should credit a) purchase discounts for $ 1080. b) purchase discounts for $ 972. c) inventory for $ 972. d) inventory for $ 1080.
The following information was available for the year ended December 31, 2019: Net sales $821,250 Cost of goods sold Average accounts receivable for the year Accounts receivable at year-end Average inventory for the year Inventory at year-end 602, 250 39,100 30,400 166,000 157,575 Required: a. Calculate the inventory turnover for 2019. (Round your answer to 2 decimal places.) b. Calculate the number of days' sales in inventory for 2019, using year-end inventories. (Use 365 days a year. Round your answer to 1 decimal place.) c. Calculate the accounts receivable turnover for 2019. (Round your answer to 1 decimal place.) d. Calculate the number of days' sales in accounts receivable for 2019, using year-end accounts receivable. (Use 365 days a year. Round your answer to 1 decimal place.) a. Inventory turnover b. Number of days' sales in Inventory c. Accounts receivable turnover d. Number of days' sales in accounts receivable times days times days
Volata Company began operations on January 1, 2019. In the second quarter of 2020, It adopted the FIFO method of inventory valuation. In the past, It used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow: Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (25%) Net income Cost of goods sold (FIFO) 1stQ $ 31,000 6,100 4,100 $ 20,800 5,200 $ 15,600 Net income Net income per common share: 1stQ $5,900 2ndQ $ 33,000 7,100 4,300 Three Months Ended June 30 2019 2020 $ 21,600 5,400 $ 16,200 S 2019 18,300 S 18.30 2019 3rdQ $ 35,000 Answer is not complete. 7,900 4,700 If the FIFO method had been used since the company began operations, cost of goods sold in each of the previous quarters would have been as follows $ 22,400 5,600 $ 16,800 2ndQ 3rdQ $6,700 $7,300 4thQ $ 37,000 9,100 5,100 $ 22,800 5,700 $ 17,100 Six Months Ended June 30 2019 2020 4thQ $ 8,100 Sales for the second quarter of 2020 are…
Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow: Sales Cost of goods sold (LIFO) Operating expenses. Income before income taxes. Income taxes (25%) Net income Cost of goods sold (FIFO) 1stQ $ 34,000 6,400 4,400 $ 23, 200 5,800 $ 17,400 2ndQ $36,000 Net income Net income per common share 7,400 4,600 $ 24,000 6,000 $ 18,000 2019 If the FIFO method had been used since the company began operations, cost of goods sold in each of the previous quarters would have been as follows: 2019 Three Months Ended June 30 2019 2020 $18,000 $21,100 X $18.00 $20.10 3rdQ $ 38,000 8,200 5,000 $ 24,800 6,200 $ 18,600 1stQ 2ndQ 3rdQ $6,200 $7,000 $7,600 Answer is not complete. 4thQ $ 40,000 9,400 5,400 $ 25,200 6,300 $ 18,900 Sales for the second quarter of 2020 are $44,000, cost of goods sold…
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