Question 3 of 5 View Policies Show Attempt History Current Attempt in Progress 03/1 E The management of Oriole Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average- cost. The company requests your help in determining the results of operations for 2027 if either the FIFO or the LIFO method had been used. For 2027, the accounting records show these data: Inventories Purchases and Sales Beginning (8,000 units) $24,000 Total net sales (181,000 units) $932,150 Ending (17,000 units) Total cost of goods purchased (190,000 units) 656,000 B Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 50,000 $3.20 $160,000 7 40,000 3.35 134,000 3 40,000 3.50 140,000 60,000 3.70 222,000 190,000 $656,000 Operating expenses were $125,000, and the company's income tax rate is 40%. (a) Your answer is partially correct. Prepare comparative condensed income statements for 2027 under FIFO and LIFO. ORIOLE INC. Condensed Income Statements Sales Revenues Cost of Goods Sold For the Year Ended December 31, 2027 FIFO OST 206 Beginning Inventory LIFO $62,150 24.000 24,000 Q Search եր NEW இ

Question 3 of 5 View Policies Show Attempt History Current Attempt in Progress 03/1 E The management of Oriole Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average- cost. The company requests your help in determining the results of operations for 2027 if either the FIFO or the LIFO method had been used. For 2027, the accounting records show these data: Inventories Purchases and Sales Beginning (8,000 units) $24,000 Total net sales (181,000 units) $932,150 Ending (17,000 units) Total cost of goods purchased (190,000 units) 656,000 B Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 50,000 $3.20 $160,000 7 40,000 3.35 134,000 3 40,000 3.50 140,000 60,000 3.70 222,000 190,000 $656,000 Operating expenses were $125,000, and the company's income tax rate is 40%. (a) Your answer is partially correct. Prepare comparative condensed income statements for 2027 under FIFO and LIFO. ORIOLE INC. Condensed Income Statements Sales Revenues Cost of Goods Sold For the Year Ended December 31, 2027 FIFO OST 206 Beginning Inventory LIFO $62,150 24.000 24,000 Q Search եր NEW இ

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 5E: Inventory Write-Down The following information is taken from Aden Companys records: Required: 1....

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( Appendix 6B) Inventory Costing Methods Grencia Company uses a periodic inventory system. For 2018 and 2019, Grencia has the following data (assume all purchases and sales are for cash): Required: 1. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using FIFO. 2. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using LIFO. 3. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using the average cost method. ( Note: Use four decimal places for per unit calculations and round all other numbers to the nearest dollar.) 4. CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes? 5. CONCEPTUAL CONNECTION Which method produces the most realistic amount for income? For inventory? Explain your answer. 6. CONCEPTUAL CONNECTION What is the effect of purchases made later in the year on the gross margin when LIFO is employed? When FIFO is employed? Be sure to explain why any differences occur. 7. CONCEPTUAL CONNECTION If you worked Problem 6-68B, compare your answers. What are the differences? Be sure to explain why any differences occurred.
( Appendix 6B) Inventory Costing Methods: Periodic System Harrington Company had the following data for inventory during a recent year: Assume that Harrington uses a periodic inventory accounting system. Required: 1. Using the FIFO, LIFO, and average cost methods, compute the ending inventory and cost of goods sold. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.) 2. CONCEPTUAL CONNECTION Which method will produce the most realistic amount for income? For inventory? 3. CONCEPTUAL CONNECTION Which method will produce the lowest amount paid for taxes?
( Appendix 6B) Inventory Costing Methods Jet Black Products uses a periodic inventory system. For 2018 and 2019, Jet Black has the following data: All purchases and sales are for cash. Required: 1. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using FIFO. 2. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using LIFO. 3. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using the average cost method. ( Note: Use four decimal places for per unit calculations and round all other numbers to the nearest dollar.) 4. CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes? 5. CONCEPTUAL CONNECTION Which method produces the most realistic amount for income? For inventory? Explain your answer. 6. CONCEPTUAL CONNECTION What is the effect of purchases made later in the year on the gross margin when LIFO is employed? When FIFO is employed? Be sure to explain why any differences occur. 7. CONCEPTUAL CONNECTION If you worked Problem 6-68A, compare your answers. What are the differences? Be sure to explain why any differences occurred.
Inventory Write-Down Byron Company has five products in its inventory and uses the FIFO cost flow assumption. Specific data for each product are as follows: Required: 1. What is the correct inventory value, assuming the LCNRV rule is applied to each item of inventory? 2. What is the correct inventory value, assuming the LCNRV rule is applied to the total of inventory? 3. Next Level Comment on any differences that result from applying the LCNRV rule to individual items compared to the total of inventory.
(Appendix 8.1) Inventory Write-Down The following are the inventories for the years 2019, 2020, and 2021 for Parry Company: Required: 1. Assume the inventory that existed at the end of each year was sold in the subsequent year. Prepare journal entries to record the lower of cost or net realizable value for each of the following alternatives: a. allowance method, periodic inventory system b. direct method, periodic inventory system 2. Next Level Refer to your answer for P8-2. How does the use of the periodic inventory system affect the write-down of inventory to the lower of cost or net realizable value?
( Appendix 6B) Inventory Costing Methods: Periodic LIFO Refer to the information for Filimonov Inc. (p. 337) and assume that the company uses a periodic inventory system. Required: Calculate the cost of goods sold and the cost of ending inventory using the LIFO inventory costing method.
Question 2 Grouper Company began operations on January 1, 2018, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2021. The following information is available for the years 2018-2020. 2018 2019 2020 Net Income Computed Using Average-Cost Method FIFO Method $15,910 $19.060 21,170 25,200 2018 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2021. (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 O for the amounts.) Account Titles and Explanation 2019 18,170 $ 19,880 $ (b) Determine net income to be reported for 2018, 2019, and 2020, after giving effect to the change in accounting principle. 2020 $ LIFO Method $12,010 14,110 17,040 Net Income Debit Account Titles and Explanation Credit (c) Assume Grouper Company used the LIFO method instead…
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Current Attempt in Progress Swifty Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCNRV) basis in valuing inventories: Net Product Cost Realizable Value A $126000 $129000 B 80000 72000 C 154000 155000 If Swifty applies the LCNRV basis, the value of the inventory reported on the balance sheet would be O $352000. O $360000. O $356000. O $364000.
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Accounting for Correction of Errors, Change in Accounting Estimates and Accounting Policies Problem 1 CPA Co. has been using the FIFO method of inventory costing since it began operations in 2019. In 2020, the company decided to change to the weighted average method. The following are the December 31 inventory balances under each method: 2019 2020 FIFO P450,000 895,000 Weighted Average P560,000 999,000 _1. What is the cumulative effect of this accounting change in the January 1, 2020 Retained Earnings as a result of the accounting change? (Income tax rate is 30%) Indicate whether debit or credit.
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