Please help me answer this question K. Co. uses LIFO inventory method. At the end of the 2006accounting period, the company reported $10,000 of netearnings on I/S. The inventory balance on the 2006 B/S is$7,000. In the footnotes, LIFO reserve at the end of 2006 is$3,000 and LIFO reserve at the end of 2005 is $2,500. JJ Co.uses FIFO and reported 10,300 of net earnings on the 2006I/S. Which company has a higher earnings if both of thecompanies would use the same inventory method?

Step 1: Define Inventory methodThe inventory method is to evaluate the inventory (raw material or…

Answered: K. Co. uses LIFO inventory method. At…

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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Assume that Merryland’s Markets had an inventory balance of $32 570 at the close of the last accounting period. The following sales and purchase transactions are for the current period. NOTE: GST at 10% is included in the amount where applicable. 1. 2. 3. 4. Purchased goods on account for $29,909. Returned part of the above purchase that had an original invoice price of $1,749. Paid for the balance of the purchase in time to receive a discount of 2% of the invoice price. Sold goods on account costing $24 900 for an invoice price of $54 802. Required (a) Prepare general journal entries assuming the perpetual inventory system is used. (b) Suppose that a physical count of the inventory at the end of the current period shows inventory of $30,420 to be on hand. Present the entries (if any) required to adjust for any discrepancy.
A company has the following information available that was used to report inventory using the dollar-value LIFO method. Year Year-End Cost Cost Index 12/31/2020 $250,000 1.00 12/31/2021 259,000 1.06 For the year ended 12/31/2021, the company reported inventory of $274,540 ($259,000 × 1.06). Which of the following statements is correct? O The amount reported for ending inventory should be calculated as $250,000 + ($9,000 × 1.06). O The amount reported for ending inventory should be calculated as $250,000 + ($9,000/1.06). The amount reported for ending inventory is correct. O The amount reported for ending inventory should be calculated as $259,000/1.06.
In March 2015, XYZ Corp. purchased an item of inventory for $30. By June, that item could be purchased for $26 and re-sold for $31. XYZ's normal profit for the item is $4. At what amount should XYZ report the item in its June 30 balance sheet? XYZ uses the LIFO inventory cost flow assumption. (omit , and $ in the answer) 30
Hot Pepper Company had the following information in its accounting records at year end:Inventory Cost $4,000,000It estimates the net realizable value of this inventory is $3,500,000. As a result of this information Hot Pepper Co. would: Make a journal entry debiting a loss on inventory decline for $500,000 Make a journal entry debiting the allowance for inventory valuation for $500,000 Make a journal entry crediting the allowance for inventory valuation for $500,000 Make a journal entry debiting a gain on market appreciation for $500,000 Make no entry
Esquire Incorporated uses the LIFO method to report its inventory. Inventory at the beginning of the year was $768,000 (32,000 units at $24 each). During the year, 104,000 units were purchased, all at the same price of $27 per unit. 112,000 units were sold during the year. Calculate ending inventory and cost of goods sold at the end of the year based on a periodic inventory system. Beginning Inventory Purchases Total Cost of Goods Available for Sale Cost per unit 32,000 $24 $ 104,000 27 136,000 Number of units Cost of Goods Available for Sale $ 768,000 2,808,000 3,576,000 Cost of Goods Sold - Periodic LIFO Cost per unit $ 24 $ $27 Number of units sold 0 Cost of Goods Sold $ 0 0 0 Ending Inventory - Periodic LIFO Cost Number of units in per ending inventory unit $ 24 $ $27 0 Ending Inventory $ 0 0 0
Romanoff Industries had the following inventory transactions occur during 2013: Units Cost/unit 2/1/13 Purchase 18 $45 3/14/13 Purchase 31 $47 5/1/13 Purchase 22 $49 The company sold 50 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? a. $1,106 b. $1,184 c. $2,316 d. $2,394
Kumar Inc. uses a perpetual inventory system. At January 1, 2017, inventory was $214,000,000 at both cost and net realizable value. At December 31, 2017, the inventory was $286,000,000 at cost and $265,000,000 at net realizable value. Prepare the entry under (a) the cost-of-goods-sold method and (b) the loss method.
Sunland Company had ending inventory at end-of-year prices of $184,500 at December 31, 2016; 204,700 at December 31, 2017; and $220,000 at December 31, 2018. The year-end price indexes were 100 at 12/31/16, 106 at 12/31/17, and 110 at 12/31/18. Compute the ending inventory for Sunland Company for 2016 through 2018 using the dollar-value LIFO method. (Round answers to 0 decimal places, e.g. 5,275.) 2016 2017 2018 Ending inventory %24 %24 %24
At the beginning of the year, Sheridan Company had an inventory of $745000. During the year, the company purchased goods costing $1629950. If Sheridan Company reported ending inventory of $81000 and sales of $3730000, the company's cost of goods sold and gross profit rate must be $1436050 and 62.6%. $ 2293950 and 61.5%. $1436050 and 38.5 %. $ 2293950 and 38.5%. At the beginning of the year, Sheridan Company had an inventory of $745000. During the year, the company purchased goods costing $1629950. If Sheridan Company reported ending inventory of $81000 and sales of $3730000, the company's cost of goods sold and gross profit rate must be $1436050 and 62.6%. $2293950 and 61.5% O $1436050 and 38.5% O $2293950 and 38.5%
Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2016; $119,900 at December 31, 2017; and $134,560 at December 31, 2018. The year-end price indexes were 100 at 12/31/16, 110 at 12/31/17, and 116 at 12/31/18. Compute the ending inventory for Midori Company for 2016 through 2018 using the dollar-value LIFO method. Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow Year Ended December 31 Inventory at Current-Year Cost Price Index 2016 $19,750 100 2017 22,140 108 2018 25,935 114 Compute the value of the 2017 and 2018 inventories using the dollar-value LIFO method
Marigold Inc. uses LIFO inventory costing. At January 1, 2025, inventory was $211,649 at both cost and market value. At December 31, 2025, the inventory was $287,776 at cost and $269,210 at market value. Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method and (b) the loss method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation (a) (b) Cost of Goods Sold Allowance to Reduce Inventory to Market Inventory Loss Debit 18566 18566 Credit 18566 18566

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