### Springer Anderson Gymnastics Financial StatementsSpringer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). The preliminary income statement follows:- **Sales Revenue:** $160,000- **Cost of Goods Sold:** - Beginning Inventory: $20,000 - Purchases: $101,000 - Goods Available for Sale: $121,000 - Ending Inventory: $38,140 - Cost of Goods Sold: $82,860- **Gross Profit:** $77,140- **Operating Expenses:** $36,000- **Income from Operations:** $41,140- **Income Tax Expense (20%):** $8,228- **Net Income:** $32,912#### Restatement of Financial Statements for LCM/NRV RuleYou have been asked to restate the financial statements to incorporate the LCM/NRV rule. Below is the data related to the ending inventory:| Item | Quantity | Purchase Cost per Unit | Total Purchase Cost | Replacement Cost per Unit ||------|----------|------------------------|---------------------|---------------------------|| A | 2,000 | $4.00 | $8,000 | $5.00 || B | 800 | $5.80 | $4,640 | $2.90 || C | 4,500 | $3.00 | $13,500 | $1.45 || D | 2,000 | $6.00 | $12,000 | $4.00 || **Total** | | | **$38,140** | |This table details the purchase cost and replacement cost per unit for each inventory item, along with the total purchase cost for each quantity. To effectively address the requirements given in the exercise, we need to restate the income statement to reflect the Lower of Cost or Net Realizable Value (LCM/NRV) valuation of the ending inventory. This should be applied on an item-by-item basis to ensure accurate financial reporting. Let’s break down the components of the restated income statement for Springer Anderson Gymnastics for the year ended December 31.### Income Statement Structure:1. **Sales Revenue** - This category reflects the total revenue generated from sales during the period.2. **Cost of Goods Sold:** - **Beginning Inventory** - Represents the value of inventory at the start of the period. - **Purchases** - The total cost of additional inventory bought during the period. - **Goods Available for Sale** - Sum of Beginning Inventory and Purchases, indicating total inventory available. - **Ending Inventory** - Valuation after applying LCM/NRV. - **Cost of Goods Sold (COGS)** - Calculated by subtracting Ending Inventory from Goods Available for Sale.3. **Gross Profit** - Determined by subtracting COGS from Sales Revenue.4. **Operating Expenses** - All expenses related to the operations of the business, excluding COGS.5. **Income from Operations** - Gross Profit minus Operating Expenses.6. **Income Tax Expense** - Taxes owed on the Income from Operations.7. **Net Income** - Final profit after deducting Income Tax Expense from Income from Operations.### Explanation for Educational Purposes:The process of applying LCM/NRV ensures that inventory is valued at the lower of its historical cost or its net realizable value, reflecting potential market declines in value. This conservative approach adheres to accounting principles, preventing overstatement of assets and income. It’s crucial for providing stakeholders with an accurate picture of financial health.The restatement process is essential for aligning financial statements with realistic market conditions. Understanding these components allows for better financial analysis and decision-making.

Last in first out (LIFO) which reflects the process of determining the inventory cost on the basis…

Answered: inventory cOsting method but did not…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Supply the missing dollar amounts for each of the following independent cases: Cases A B C D E Sales Revenue Beginning Inventory $ 1,100 $ 1,300 1,280 1,400 Purchases 500 $ 1,200 600 1,200 500 450 1,000 1,300 Cost of Goods Available for Sale Cost of Goods Sold $ 780 600 1,050 Cost of Ending Inventory 580 700 650 Gross Profit 800 980
Net sales (net of 40K returns and 10K discounts) 7. Manuals Corp. determined the following information for the purpose of applying the retail method of inventory estimation: of applying the retail method of inventory estimation: Cost Retail P 75,000 P 45,000 Inventory, beg. Net sales (net of 40K returns and 10K discounts) 590,000 270,000 590,000 Purchases Freight-in Net markups Net markdowns Normal shrinkage 6,750 50,000 20,000 12,000 How much is the cost of goods sold under each of the following methods? FIFO Average c. 283,329.30 d. 283,329.30 284,698.80 FIFO Average a. 281,229.67 282,828.77 b. 273,329.30 284,698.80 282,828.77
In Year 1 and Year 2, Basilisk Manufacturing reported its gross margin as follows: Basilisk Manufacturing Partial Income Statement Year 1 Year 2 Sales $6,720,000 $7,340,000 Cost of goods sold 3,001,600 3,538,400 Gross margin 3,718,400 3,801,600 In Year 3, Basilisk Manufacturing changed its inventory valuation method. If the new inventory method had been used in Year 1 and Year 2, cost of goods sold would have been less by $100,000 in Year 1 and by $140,000 in Year 2. In the Year 3 financial statements, what should be reported for the Year 2 gross margin? Select one: O O O O a. $4,161,600 b. $3,801,600 (There would be no difference in the amount reported since the inventory valuation method wasn't changed until Year 3.) c. $3,661,600 d. $3,941,600 e. $3,561,600
Platinum Taco Shell Inc. uses a retail inventory method. Below is last year's data: Cost Retail Beginning inventory 347,900 784,000 Purchases 730,100 980,000 Freight in 39,200 Mark ups 98,000 Mark downs 116,375 Sales 686,000 Inflation factor: 1.1 What is the Ending Inventory under Dollar value LIFO, conventional retail, and average cost? What is the COGS under Dollar value LIFO, conventional retail, and average cost?
ROI, RI, EVA, and performance evaluation. Cora Manufacturing makes fashion products and competes on the basis of quality and leading-edge designs. The company has two divisions, clothing and cosmetics. Cora has $5,000,000 invested in assets in its clothing division. After-tax operating income from sales of clothing this year is $1,000,000. The cosmetics division has $12,500,000 invested in assets and an after-tax operating income this year of $2,000,000. The weightedaverage cost of capital for Cora is 6%. The CEO of Cora has told the manager of each division that the division that “performs best” this year will get a bonus.
Please do not give solution in image format thanku
S At the end of the year, Randy's Parts Company had the following items in inventory: Item P1 Quantity 60 P2 40 P3 80 P4 70 Required Unit Cost Unit Market Value $ 85 70 130 125 $ 90 72 a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item. b. Provide the adjustment necessary to write down the inventory based on Requirement a. Assume that Randy's Parts Co. uses the perpetual inventory system. c. Determine the amount of ending inventory, assuming that the lower-of-cost-or-market rule is applied to the total inventory in aggregate. 120 130 d. Provide the adjustment necessary to write down the inventory based on Requirement c. Assume that Randy's Parts Co. uses the perpetual inventory system. Required A Required B Required C Ending inventory Complete this question by entering your answers in the tabs below. Required D Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each…
D
None
Valuing Inventory at Lower-of-Cost-or-Market Management of Tarry Company takes the position that under the lower-of-cost-or-market rule, the two items below are reported in ending inventory at $119,520 (total). Inventory cost is reported using LIFO. • Edgers: 2,160 in inventory; cost is $22 each; replacement cost is $16 each; estimated sale price is $30 each; estimated distribution cost is $3 each; and normal profit is 10% of sale price. • Hedge clippers: 1,440 in inventory; cost is $50 each; replacement cost is $36 each; estimated sale price is $90 each; estimated distribution cost is $28 each; and normal profit is 20% of sale price. a. Compute your inventory valuation by item and in total for the Tarry Company inventory reported above. Inventory valuation for edgers $ Inventory valuation for hedge clippers Total inventory valuation b. Prepare the entry, if any, to report inventory at the lower-of-cost-or-market. Assume that all adjustments directly impact cost of goods sold and…
76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Number of Units Unit Cost Sales Beginning Inventory 260 $100 Sold 160 $140 Purchased 500 103 Sold 400 142 Purchased 420 110 Sold 370 174 Ending Inventory 250 Cost of Goods Sold FIFO $111,100 LIFO 97,900 AVG 96,805 Compare the ealculations for gross margin for A76 Company, based on the results of the perpetual inventory calculations using FIFO, LIFO, and AVG. Round intermediate calculation to 2 decimal places and final answer to nearest whole dollar. Comparison of FIFO, LIFO, AVG; Perpetual FIFO LIFO AVG Sales Revenue 24 Cost of Goods Sold Gross Margin
If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any? If no entry is required, select "None" and leave the amount boxes blank. Balance Sheet: Merchandise Inventory $4 Current Assets Total Assets Retained Earnings Income Statement: Cost of Goods Sold Gross Profit/Gross Margin Net Income

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

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