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 $296,000 $ 38,000 198,000 236,000 131,900 Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit 104, 100 191,900 69,000 122,900 36,870 $ 86,030 Operating Expenses Income from Operations Income Tax Expense (30%) Net Income 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: Item Quantity Per Unit 2,700 1,700 7,800 3,400 $ 8 5 10 7 Purchase Cost Total $ 21,600 8,500 78,000 23,800 Net Realizable Value per Unit $ 9 3 12 A В C $131,900

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 $296,000 $ 38,000 198,000 236,000 131,900 Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit 104, 100 191,900 69,000 122,900 36,870 $ 86,030 Operating Expenses Income from Operations Income Tax Expense (30%) Net Income 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: Item Quantity Per Unit 2,700 1,700 7,800 3,400 $ 8 5 10 7 Purchase Cost Total $ 21,600 8,500 78,000 23,800 Net Realizable Value per Unit $ 9 3 12 A В C $131,900

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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