It would have reported 2007 gross profit closest to ? Sauerbraten Corp. reported 2007 sales ($ in millions) of$5,657 and a cost of goods sold of $4,350. The companyuses the LIFO method for inventory valuation. It disclosesthat if the FIFO inventory valuation method had beenused, inventories would have been $74.5 million and $62.4million higher in 2007 and 2006, respectively.If Sauerbraten used the FIFO method exclusively, it wouldhave reported 2007 gross profit closest to?

Concept of Gross ProfitGross Profit is the difference between a company's total revenue and the cost…

Answered: Sauerbraten Corp. reported 2007 sales…

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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Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $224,988 and average assets of $1,558,950. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $43,570 more than under FIFO, and its average assets would have been $42,390 less than under FIFO. Required: a. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).) b. Suppose that two years later costs and prices were falling. Under FIFO, net income and average assets were $268,168 and $1,893,070, respectively. If LIFO had been used through the years, inventory values would have been $41,250 less than under FIFO, and current year cost of goods sold would have been $15,419 less than under FIFO. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages…
At the end of the Year 2 accounting period, DeYoung Company determined that the market value of its inventory was $79,800. The historical cost of this inventory was $81,400. DeFazio uses the perpetual inventory method. Assuming the amount is immaterial, how will the necessary write-down to reduce the inventory to the lower-of-cost-or-market affect the company's financial statements? Multiple Choice O O Decrease total assets, gross margin, and net income Increase total assets and net income Decrease total assets and gross margin Decrease total assets and net income
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
In 2016, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2015, CPS’s inventories were $32 million (FIFO). CPS’s records indicated that the inventories would have totaled $23.8 million at December 31, 2015, if determined on an average cost basis. Required: 1. Prepare the journal entry to record the adjustment. (Ignore income taxes.) 2. Briefly describe other steps CPS should take to report the change.
Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2016, Flay decided to change to the LIFO method. As a result of the change, net income in 2016 was $80 million. If the company had used LIFO in 2015, its cost of goods sold would have been higher by $6 million that year. Flay’s records of inventory purchases and sales are not available for 2014 and several previous years. Last year, Flay reported the following net income amounts in its comparative income statements: ($ in millions) 2015 2014 2013 Net income $84 $82 $80 Required: 1. Prepare the journal entry at the beginning of 2016 to record the change in accounting principle. (Ignore income taxes.) 2. Briefly describe other steps Flay will take to report the change. 3. What amounts will Flay report for net income in its 2016–2014 comparative income statements?
During 2010, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows:FIFO Weighted-averageJanuary 1, 2010 71,000 77,000December 31, 2010 79,000 83,000Orca’s income tax rate is 30%. In its 2010 financial statements, what amount should Orca report as the cumulative effect of this accounting change?a.2,800b.4,000c.4,200d.6,000
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In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to theaverage cost method. At December 31, 2017, B & B’s inventories were $32 million (FIFO). B & B’s recordsindicated that the inventories would have totaled $23.8 million at December 31, 2017, if determined on anaverage cost basis. Ignoring income taxes, what journal entry will B & B use to record the adjustment in 2018?Briefly describe other steps B & B should take to report the change.

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