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Johnson Corporation began 2013 with inventory of 20,000 units of its only product. The units cost $9 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2013: b. Purchased 100,000 additional units at a cost of $12 per unit. Terms of the purchases were 2/10, n/30, and 80% of the net purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $.50 per unit were paid by Johnson. 2,000 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $.50 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received. c. Sales for the year totaled 95,000 units at $18 per unit. d. On December 28, 2013, Johnson purchased 6,000 additional units at $12 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2014. e. 23,000 units were on hand at the end of 2013.

Johnson Corporation began 2013 with inventory of 20,000 units of its only product. The units cost $9 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2013: b. Purchased 100,000 additional units at a cost of $12 per unit. Terms of the purchases were 2/10, n/30, and 80% of the net purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $.50 per unit were paid by Johnson. 2,000 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $.50 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received. c. Sales for the year totaled 95,000 units at $18 per unit. d. On December 28, 2013, Johnson purchased 6,000 additional units at $12 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2014. e. 23,000 units were on hand at the end of 2013.

FINANCIAL ACCOUNTING
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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Johnson Corporation began 2013 with inventory of 20,000 units of its only product. The units cost $9 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2013: a. b. Purchased 100,000 additional units at a cost of $12 per unit. Terms of the purchases were 2/10, n/30, and 80% of the net purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $.50 per unit were paid by Johnson. 2,000 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $.50 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received. c. Sales for the year totaled 95,000 units at $18 per unit. d. On December 28, 2013, Johnson purchased 6,000 additional units at $12 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2014. e. 23,000 units were on hand at the end of 2013. 1. Required: Determine ending inventory and cost of goods sold for 2013. (Calculate the discount based on the net purchases during the period.) 2. Assuming that operating expenses other than those indicated in the above transactions amounted to $170,000, determine income before income taxes for 2013.
Transcribed Image Text:Johnson Corporation began 2013 with inventory of 20,000 units of its only product. The units cost $9 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2013: a. b. Purchased 100,000 additional units at a cost of $12 per unit. Terms of the purchases were 2/10, n/30, and 80% of the net purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $.50 per unit were paid by Johnson. 2,000 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $.50 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received. c. Sales for the year totaled 95,000 units at $18 per unit. d. On December 28, 2013, Johnson purchased 6,000 additional units at $12 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2014. e. 23,000 units were on hand at the end of 2013. 1. Required: Determine ending inventory and cost of goods sold for 2013. (Calculate the discount based on the net purchases during the period.) 2. Assuming that operating expenses other than those indicated in the above transactions amounted to $170,000, determine income before income taxes for 2013.
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