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Presented below are income statements prepared on a LIFO and FIFO basis for Martinez Company, which started operations on January 1, 2024. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2025. The FIFO income statement is computed in accordance with the requirements of GAAP. Martinez's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored. Sales revenue Cost of goods sold Operating expenses Income before profit-sharing Profit-sharing expense Net income Answer the following questions. (a). (c) LIFO Basis 2025 $3,070 1,180 960 930 93 2024 $3,070 950 960 | 1,160 116 $837 $1.044 FIFO Basis 2025 $3,070 1,160 960 950 99 2024 MARTINEZ COMPANY Retained Earnings Statement $3,070 $ 910 960 1,200 $851 $1,084 116 Assume that Martinez has a beginning balance of retained earnings at January 1, 2025, of $1,044 using the LIFO method. The company declared and paid dividends of $500 in 2025. Prepare the retained earnings statement for 2025, assuming that Martinez has switched to the FIFO method.

Presented below are income statements prepared on a LIFO and FIFO basis for Martinez Company, which started operations on January 1, 2024. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2025. The FIFO income statement is computed in accordance with the requirements of GAAP. Martinez's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored. Sales revenue Cost of goods sold Operating expenses Income before profit-sharing Profit-sharing expense Net income Answer the following questions. (a). (c) LIFO Basis 2025 $3,070 1,180 960 930 93 2024 $3,070 950 960 | 1,160 116 $837 $1.044 FIFO Basis 2025 $3,070 1,160 960 950 99 2024 MARTINEZ COMPANY Retained Earnings Statement $3,070 $ 910 960 1,200 $851 $1,084 116 Assume that Martinez has a beginning balance of retained earnings at January 1, 2025, of $1,044 using the LIFO method. The company declared and paid dividends of $500 in 2025. Prepare the retained earnings statement for 2025, assuming that Martinez has switched to the FIFO method.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Presented below are income statements prepared on a LIFO and FIFO basis for Martinez Company, which started operations on January 1, 2024. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2025. The FIFO income statement is computed in accordance with the requirements of GAAP. Martinez's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored. Sales revenue Cost of goods sold Operating expenses Income before profit-sharing Profit-sharing expense Net income Answer the following questions. (a) (c) LIFO Basis : 2025 $3,070 1,180 960 930 93 2024 960 1,160 $3,070 $3,070 $3,070 950 116 FIFO Basis $837 $1,044 2025 1,160 960 950 99 $851 2024 MARTINEZ COMPANY Retained Earnings Statement $ 910 960 1,200 Assume that Martinez has a beginning balance of retained earnings at January 1, 2025, of $1,044 using the LIFO method. The company declared and paid dividends of $500 in 2025. Prepare the retained earnings statement for 2025, assuming that Martinez has switched to the FIFO method. 116 $1,084
Transcribed Image Text:Presented below are income statements prepared on a LIFO and FIFO basis for Martinez Company, which started operations on January 1, 2024. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2025. The FIFO income statement is computed in accordance with the requirements of GAAP. Martinez's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored. Sales revenue Cost of goods sold Operating expenses Income before profit-sharing Profit-sharing expense Net income Answer the following questions. (a) (c) LIFO Basis : 2025 $3,070 1,180 960 930 93 2024 960 1,160 $3,070 $3,070 $3,070 950 116 FIFO Basis $837 $1,044 2025 1,160 960 950 99 $851 2024 MARTINEZ COMPANY Retained Earnings Statement $ 910 960 1,200 Assume that Martinez has a beginning balance of retained earnings at January 1, 2025, of $1,044 using the LIFO method. The company declared and paid dividends of $500 in 2025. Prepare the retained earnings statement for 2025, assuming that Martinez has switched to the FIFO method. 116 $1,084
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