Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO inventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows: Sales Revenue Cost of Goods Sold Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (30%) Net Income $296,000 $ 38,000 198,000 236,000 131,900 104,100 191,900 69,000 122,900 36,870 $ 86,030 Assume you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory

Smart Company prepared its annual financial statements dated December 31. The company reported its inventory using the FIFO inventory costing method and failed to evaluate its net realizable value at December 31. The preliminary income statement follows: Sales Revenue Cost of Goods Sold Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Income Tax Expense (30%) Net Income $296,000 $ 38,000 198,000 236,000 131,900 104,100 191,900 69,000 122,900 36,870 $ 86,030 Assume you have been asked to restate the financial statements to incorporate LCM/NRV. You have developed the following data relating to the ending inventory

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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Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). The preliminary income statement follows:
Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available at the end of the year: Beginning inventory Net purchases Cost $ 450,000 935,000 72,800 Retail $ 580,000 1,360,000 63,000 33,000 1,275,000 Freight-in Net markups Net markdowns Net sales Estimate ending inventory and cost of goods sold using the conventional method. Note: Round ratio calculation to 2 decimal places (i.e., 0.1234 should be entered as 12.34%.) Beginning inventory Plus: Net purchases Freight-in Net markups Goods available for sale Less: Net markdowns Goods available for sale Cost-to-retail percentage Less: Net sales × Answer is complete but not entirely correct. Cost Retail Cost-to- Retail Ratio $ 450,000 935,000 $ 580,000 1,360,000 72,800 63,000 2,003,000 (33,000) 1,457,800 1,970,000 72.50% x Estimated ending inventory at retail Estimated ending inventory at cost 533,379 x Estimated cost of goods sold $ 924,421…
Jones Company started the year with no inventory. During the year, it purchased two identical inventory items at different times. The first purchase cost $1,170 and the other, $1,550. Jones sold one of the items during the year. Required Based on this information, how much product cost would be allocated to cost of goods sold and ending inventory on the year-end financial statements, assuming use of a. FIFO? b. LIFO? c. Weighted average? Cost of goods sold Ending inventory $ FIFO 1,170 LIFO $ 1.170 Weighted Average
Ace Company reported the following information for the current year: Sales $ 416,000 Cost of goods sold: Beginning inventory $ 141,000 Cost of goods purchased 279,000 Cost of goods available for sale 420,000 Ending inventory 150,000 Cost of goods sold 270,000 Gross profit $ 146,000 The beginning inventory balance is correct. However, the ending inventory figure was overstated by $26,000. Given this information, the correct gross profit would be:
Compute ending inventory and cost of goods sold under the LIFO, assuming Matthias Company uses the periodic inventory system.
Wayward Company wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Wayward's gross profit rate averages 40%. The following information for the first quarter is available from its records. Beginning inventory, January 1 Cost of goods purchased Sales Sales returns Required: Use the gross profit method to estimate the company's first-quarter ending inventory. Beginning inventory, January 1 Net cost of goods purchased Cost of goods available for sale Estimated cost of goods sold Estimated March 31 inventory $ $ 430,260 1,069,050 1,321,150. 10,750 $ 430,260 1,069,050 1,499,310 786,240
Numeric Company uses the periodic inventory method and had no beginning inventory. The company purchased 7 units of inventory at $8 per unit during January, 5 units of inventory at $10 per unit during February, and 6 units of inventory at $11.00 per unit during June. The company sold 6 units of inventory during October. There were no additional purchases or sales during the remainder of the year. If Numeric Company uses the weighted average method, what is the cost of its ending inventory?
Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). The preliminary income statement follows: Sales Revenue $ 142,000 Cost of Goods Sold Beginning Inventory $ 15,500 Purchases 92,000 Goods Available for Sale 107,500 Ending Inventory 23,245 Cost of Goods Sold 84,255 Gross Profit 57,745 Operating Expenses 31,500 Income from Operations Income Tax Expense (40%) 26,245 10,498 Net Income $ 15,747 Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed the following data relating to the ending inventory: Purchase Cost Replacement Cost per Quantity 1,550 Item Per Unit Total Unit A $ 3.10 $ 4,805 $ 4.10 2,975 7,560 B 700 4.25 2.10 3,600 2.10 1.05 D 1,550 5.10 7,905 3.10 $ 23,245 Required: 1. Restate the income statement to reflect…
SCC Company reported the following for the current year: $ 52,000 45,900 2,400 8,400 Net sales Cost of goods sold Beginning balance in inventory Ending balance in inventory Compute (a) Inventory turnover and (b) days' sales in Inventory. Hint Inventory turover uses average Inventory and days' sales in Inventory uses the ending balance in Inventory. Complete this question by entering your answers in the tabs below. Inventory Days Sales In Turnover Inventory Compute the inventory turnover. Numerator: 1 1 1 Inventory Turnover Denominator:
Delta Apparel Inc. uses a perpetual inventory system. At the beginning of the year inventory amounted to $ 50,000. During the year, the company purchased merchandise for $ 230,000 and sold merchandise costing $ 245,000. A physical inventory taken at year-end indicated shrinkage losses of $4,000. Prior to the recording of these shrinkage losses, the year-end balance in the companys Inventory account was :- a. $ 31,000 b. $ 35,000 c. $ 50,000 d. $ 55,00
Harmes Company is a clothing store that uses the retail inventory method. The following information relates to its operations during the year: Cost Retail Inventory, January 1 $32,500 $65,000 Purchases 130,000 215,667 Markups (net) — 3,000 Markdowns (net) — 2,000 Sales — 190,000 Required:
If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any? If no entry is required, select "None" and leave the amount boxes blank. Balance Sheet: Merchandise Inventory $4 Current Assets Total Assets Retained Earnings Income Statement: Cost of Goods Sold Gross Profit/Gross Margin Net Income