Jillet Corporation began the year with inventory of 16,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year: a. Purchased 80,000 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, n/30. The company uses the gross method to record purchase discounts. The inventory was purchased f.o.b. shipping point and additional freight costs of $0.50 per unit were charged to Jillet. b. 1,600 units purchased during the year were returned to suppliers for credit. Jillet was also given credit for the freight charges of $0.50 per unit on the original purchase. The units were defective and were returned two days after they were received. The remaining inventory was paid within the discount period. (Hint: The discount applies only to inventory and not the freight.) c. Sales for the year totaled 75,000 units at $18 per unit. (Hint: The cost of the inventory sold includes the purchase cost of those units plus freight less purchase discount.) d. On December 28, Jillet purchased 5,600 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Jillet's warehouse on January 4 of the following year. e. 19,400 units were on hand at the end of the year.
Jillet Corporation began the year with inventory of 16,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year: a. Purchased 80,000 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, n/30. The company uses the gross method to record purchase discounts. The inventory was purchased f.o.b. shipping point and additional freight costs of $0.50 per unit were charged to Jillet. b. 1,600 units purchased during the year were returned to suppliers for credit. Jillet was also given credit for the freight charges of $0.50 per unit on the original purchase. The units were defective and were returned two days after they were received. The remaining inventory was paid within the discount period. (Hint: The discount applies only to inventory and not the freight.) c. Sales for the year totaled 75,000 units at $18 per unit. (Hint: The cost of the inventory sold includes the purchase cost of those units plus freight less purchase discount.) d. On December 28, Jillet purchased 5,600 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Jillet's warehouse on January 4 of the following year. e. 19,400 units were on hand at the end of the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:3. For financial reporting purposes, the company uses LIFO (amounts based on a periodic inventory system). Record the year-end
adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $16,200.
4. Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other
than those indicated in the above transactions amounted to $162,000.
Transcribed Image Text:Jillet Corporation began the year with inventory of 16,000 units of its only product. The units cost $8 each. The company uses a
perpetual inventory system and the FIFO cost method. The following transactions occurred during the year:
a. Purchased 80,000 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, n/30. The company uses the gross
method to record purchase discounts. The inventory was purchased f.o.b. shipping point and additional freight costs of $0.50
per unit were charged to Jillet.
b. 1,600 units purchased during the year were returned to suppliers for credit. Jillet was also given credit for the freight charges of
$0.50 per unit on the original purchase. The units were defective and were returned two days after they were received. The
remaining inventory was paid within the discount period. (Hint: The discount applies only to inventory and not the freight.)
c. Sales for the year totaled 75,000 units at $18 per unit. (Hint: The cost of the inventory sold includes the purchase
cost of those units plus freight less purchase discount.)
d. On December 28, Jillet purchased 5,600 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at
Jillet's warehouse on January 4 of the following year.
e. 19,400 units were on hand at the end of the year.
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