Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO is used. (2) Situation D: LIFO is used. The basic data common to all four situations are sales, 520 units for $20,800; beginning inventory, 290 units; purchases, 410 units; ending inventory, 180 units; and operating expenses, $3,500. The income tax rate is 40%. Required: 1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. 2. Complete the following sentence: 3. Complete the following sentence regarding the relative effects on the cash position for each situation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. (Round your answers to nearest dollar amount.) Sales revenue Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Expenses Pretax income Income tax expense Net income Situation A FIFO $ PRICES RISING $ Situation B LIFO 20,800 $ 2,900 4,920 7,820 2,160 5,660 15,140 3,500 11,640 4,656 6,984 20,800 $ 2,900 4,920 7,820 3,500 PRICES FALLING Situation C FIFO 20,800 3,480 4,100 3,500 Situation D LIFO $ 20,800 3,480 4,100 2,160 3,500 Show less A
Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO is used. (2) Situation D: LIFO is used. The basic data common to all four situations are sales, 520 units for $20,800; beginning inventory, 290 units; purchases, 410 units; ending inventory, 180 units; and operating expenses, $3,500. The income tax rate is 40%. Required: 1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. 2. Complete the following sentence: 3. Complete the following sentence regarding the relative effects on the cash position for each situation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures. (Round your answers to nearest dollar amount.) Sales revenue Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Expenses Pretax income Income tax expense Net income Situation A FIFO $ PRICES RISING $ Situation B LIFO 20,800 $ 2,900 4,920 7,820 2,160 5,660 15,140 3,500 11,640 4,656 6,984 20,800 $ 2,900 4,920 7,820 3,500 PRICES FALLING Situation C FIFO 20,800 3,480 4,100 3,500 Situation D LIFO $ 20,800 3,480 4,100 2,160 3,500 Show less A
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Income is to be evaluated under four different situations as follows:
a. Prices are rising:
(1) Situation A: FIFO is used.
(2) Situation B: LIFO is used.
b. Prices are falling:
(1) Situation C: FIFO is used.
(2) Situation D: LIFO is used.
The basic data common to all four situations are sales, 520 units for $20,800; beginning inventory, 290 units; purchases, 410 units;
ending inventory, 180 units; and operating expenses, $3,500. The income tax rate is 40%.
Required:
1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning
inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the
opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic inventory
procedures.
2. Complete the following sentence:
3. Complete the following sentence regarding the relative effects on the cash position for each situation.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning
inventory, 290 units at $10 = $2,900; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume
the opposite; that is, beginning inventory, 290 units at $12 = $3,480; purchases, 410 units at $10 = $4,100. Use periodic
inventory procedures. (Round your answers to nearest dollar amount.)
Sales revenue
Cost of goods sold:
Beginning inventory
Purchases
Goods available for sale
Ending inventory
Cost of goods sold
Gross profit
Expenses
Pretax income
Income tax expense
Net income
Situation A
FIFO
$
PRICES RISING
$
Situation B
LIFO
20,800 $
2,900
4,920
7,820
2,160
5,660
15,140
3,500
11,640
4,656
6,984
20,800 $
2,900
4,920
7,820
3,500
PRICES FALLING
Situation C
FIFO
20,800
3,480
4,100
3,500
Situation D
LIFO
$
20,800
3,480
4,100
2,160
3,500
Show less A
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