Smart Company prepared its annual financial statements dated December 31, 2020. The company applies the FIFO inventory costing method; however, the company neglected to apply the LC&NRV valuation to the ending inventory. The preliminary 2020 statement of earnings follows: Sales revenue Cost of sales Beginning inventory Purchases Cost of goods available for sale. Ending inventory (FIFO cost) Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense (30%) Net earnings Item Quantity Unit Total 3,180 $4.30 $13,674 TIT 1,630 6.30 10,269 2.80 20,244 3,330 7.30 24,309 $68,496 A Assume that you have been asked to restate the 2020 financial statements to incorporate the LC&NRV inventory valuation rule. You have developed the following data relating to the ending inventory at December 31, 2020: B C D Acquisition Cost 7,230 Net Realizable Value $5.30 4.80 4.80 $ 32,300 197,000 229,300 68,496 5.30 $293,000 160,804 132, 196 63,300 68,896 20,669 $ 48,227

Smart Company prepared its annual financial statements dated December 31, 2020. The company applies the FIFO inventory costing method; however, the company neglected to apply the LC&NRV valuation to the ending inventory. The preliminary 2020 statement of earnings follows: Sales revenue Cost of sales Beginning inventory Purchases Cost of goods available for sale. Ending inventory (FIFO cost) Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense (30%) Net earnings Item Quantity Unit Total 3,180 $4.30 $13,674 TIT 1,630 6.30 10,269 2.80 20,244 3,330 7.30 24,309 $68,496 A Assume that you have been asked to restate the 2020 financial statements to incorporate the LC&NRV inventory valuation rule. You have developed the following data relating to the ending inventory at December 31, 2020: B C D Acquisition Cost 7,230 Net Realizable Value $5.30 4.80 4.80 $ 32,300 197,000 229,300 68,496 5.30 $293,000 160,804 132, 196 63,300 68,896 20,669 $ 48,227

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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