Q 3. After analyzing financial statements of two companies of same industry: Shafer Company and Margo Company. Both are paying income taxes on their earnings, both have large inventories and Replacement cost of their product that are on the rise, over the years. A note to financial statements Disclosed that Shafer company is cost is shown far below to its replacement cost and Margo Inventory is shown at a cost close its current replacement cost. Required: Answer the following questions and explain the reasoning behind your answer. a. What method of inventory valuation is probably used by Shafer and Margo? b. Which company probably has been reporting the higher net income, support with figures? c. If both companies sold their entire inventory at the same sales price, which company would you? Expect to report the larger amount of gross profit, support with figures proving facts?

Q 3. After analyzing financial statements of two companies of same industry: Shafer Company and Margo Company. Both are paying income taxes on their earnings, both have large inventories and Replacement cost of their product that are on the rise, over the years. A note to financial statements Disclosed that Shafer company is cost is shown far below to its replacement cost and Margo Inventory is shown at a cost close its current replacement cost. Required: Answer the following questions and explain the reasoning behind your answer. a. What method of inventory valuation is probably used by Shafer and Margo? b. Which company probably has been reporting the higher net income, support with figures? c. If both companies sold their entire inventory at the same sales price, which company would you? Expect to report the larger amount of gross profit, support with figures proving facts?

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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You are asked to create the grouped income statement from the below data (its possible that you wont need all the data) production cost 70000 opening inventory of goods 400000 staff wages 50000 third party services 20000 sales 500000 rent income 70000 purchases of inventory 100000 taxes to be paid 16000 ending inventory of goods 200000 income from participation in other companies 200000 damage of building from fire 40000
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Q3) A. The following information has been taken from the accounting records of Ahmed and Company in first and second period. Period Sales Profit 2019 $ 100,000 $15,000 2020 150,000 25,000 Calculate: 1) Profit volume ratio 2) Fixed cost for two periods 3) Variable cost of two periods.
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This is currently a single-step Income Statement. Add/adjust/remove as needed to convert this to a multi-step Income Statement. 2. The formatting here needs your help! You are presenting this to important external stakeholders. Apply required (andadditional formatting to make it professional in appearance) formatting.
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Subject:accounting
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