Homework Help is Here – Start Your Trial Now!
Business
Accounting
Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,150 units at $35; purchases, 7,890 units at $37; expenses (excluding income taxes), $194,000; ending inventory per physical count at December 31, current year, 1,790 units; sales, 8,250 units; sales price per unit, $78; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req 1a Req 1b Req 2 Req 3 Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Use the COGS amount from Required 1a. Income Statement Sales Revenue Cost of goods sold Gross profit Operating expenses Pretax income Income tax expense Net income FIFO LIFO Average Cost < Req 1a Req 2 >

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,150 units at $35; purchases, 7,890 units at $37; expenses (excluding income taxes), $194,000; ending inventory per physical count at December 31, current year, 1,790 units; sales, 8,250 units; sales price per unit, $78; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req 1a Req 1b Req 2 Req 3 Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Use the COGS amount from Required 1a. Income Statement Sales Revenue Cost of goods sold Gross profit Operating expenses Pretax income Income tax expense Net income FIFO LIFO Average Cost < Req 1a Req 2 >

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Topic Video
Question

sa

S Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,150 units at $35; purchases, 7,890 units at $37; expenses (excluding income taxes), $194,000; ending inventory per physical count at December 31, current year, 1,790 units; sales, 8,250 units; sales price per unit, $78; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req 1a Req 1b Req 2 Req 3 Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Use the COGS amount from Required 1a. Income Statement Sales Revenue Cost of goods sold Gross profit Operating expenses Pretax income Income tax expense Net income FIFO LIFO Average Cost < Req 1a Req 2 >
Transcribed Image Text:S Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,150 units at $35; purchases, 7,890 units at $37; expenses (excluding income taxes), $194,000; ending inventory per physical count at December 31, current year, 1,790 units; sales, 8,250 units; sales price per unit, $78; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req 1a Req 1b Req 2 Req 3 Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Use the COGS amount from Required 1a. Income Statement Sales Revenue Cost of goods sold Gross profit Operating expenses Pretax income Income tax expense Net income FIFO LIFO Average Cost < Req 1a Req 2 >
Expert Solution
steps

Step by step

Solved in 6 steps with 5 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS