Givoly Incorporated uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Sale ($29 each) Sale ($31 each) Operating expenses (excluding income tax expense) $ 401,000 Units 7,100 19,100 10,100 8,100 16,100 Unit Cost $9 7 3 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?

Givoly Incorporated uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Sale ($29 each) Sale ($31 each) Operating expenses (excluding income tax expense) $ 401,000 Units 7,100 19,100 10,100 8,100 16,100 Unit Cost $9 7 3 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?

Name: Givoly Incorporated uses a periodic inventory system. At the end of t
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Description: Givoly Incorporated uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, theaccounting records provided the following information for product 2:Inventory, December 31, prior yearFor the curre

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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Orion Iron Corporation tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Transactions Units Unit Cost a. Inventory, Beginning 300 $ 13 For the year: b. Purchase, April 11 900 11 c. Purchase, June 1 800 14 d. Sale, May 1 (sold for $41 per unit) 300 e. Sale, July 3 (sold for $41 per unit) 620 f. Operating expenses (excluding income tax expense), $18,100 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. 4. Prepare an income statement that shows under the FIFO method, LIFO method and weighted average method. 6. Which…
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Orion Iron Corporation tracks the number of units purchased and sold throughout each year but applies its Inventory costing method at the end of the year, as if it uses a periodic Inventory system. Assume its accounting records provided the following Information at the end of the annual accounting period, December 31. Transactions a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 1 d. Sale, May 1 (sold for $40 per unit) e. Sale, July 3 (sold for $40 per unit) f. Operating expenses (excluding income tax expense), $18,500 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending Inventory. Units 200 Unit Cost $ 12 950 9 850 13 200 700 3. Compute the cost of ending Inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. 4. Prepare an Income statement that shows under the FIFO method, LIFO method and weighted average method. 6. Which Inventory costing method minimizes…
Orion Iron Corporation tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Transactions a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 1 d. Sale, May 1 (sold for $40 per unit) e. Sale, July 3 (sold for $40 per unit) f. Operating expenses (excluding income tax expense), $18,600 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. Units 400 Unit Cost $ 12 850 10 750 14 400 670 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. 4. Prepare an income statement that shows under the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes…
Givoly Incorporated uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, prior year 7,800 $ 10 For the current year: Purchase, March 5 19,800 8 Purchase, September 19 10,800 4 Sale ($26 each) 8,800 Sale ($28 each) 16,800 Operating expenses (excluding income tax expense) $ 408,000 Required: Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. Compute the difference between the pretax income and the ending inventory amounts for the two cases. Which inventory costing method may be preferred for income tax purposes?
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Scrappers Supplies tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Transactions Beginning inventory, January 1 Transactions during the year: a. Purchase on account, March 2 b. Cash sale, April 1 ($46 each) c. Purchase on account, June 30 d. Cash sale, August 1 ($46 each) Units Unit Cost 160 $ 30 32 210 (60) 36 280 (310) TIP: Although the purchases and sales are listed in chronological order, Scrappers determines the cost of goods sold after all of the purchases have occurred. Required: 1. Compute the cost of goods available for sale, cost of ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round "Cost per Unit" to 2 decimal places.) a. Last-in, first-out. b.…
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