TechGear Inc., a subsidiary, sells merchandise to its parent company, NeoWare Corp., at a markup of 20% on cost. NeoWare's beginning inventory inventory includes $24,000 worth of merchandise purchased from TechGear. During the year, TechGear sells merchandise with a retail value of $400,000 to NeoWare. At year-end, NeoWare's inventory includes $36,000 worth of merchandise purchased from TechGear. Eliminations for intercompany merchandise sales result in a net effect of decreasing ending inventory by what amount? A) $6,000 B) $7,200 C) $8,000 D) $9,000

TechGear Inc., a subsidiary, sells merchandise to its parent company, NeoWare Corp., at a markup of 20% on cost. NeoWare's beginning inventory inventory includes $24,000 worth of merchandise purchased from TechGear. During the year, TechGear sells merchandise with a retail value of $400,000 to NeoWare. At year-end, NeoWare's inventory includes $36,000 worth of merchandise purchased from TechGear. Eliminations for intercompany merchandise sales result in a net effect of decreasing ending inventory by what amount? A) $6,000 B) $7,200 C) $8,000 D) $9,000

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

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 3RE: Shaquille Corporation began the current year with inventory of 50,000. During the year, its...

See similar textbooks

Similar questions

Marigold Corporation uses a perpetual inventory system and had inventory worth $73,500 at the beginning of the year. Purchases were made during the year for $323,000; however, 10% of these goods were returned to the supplier, and a 3% discount was taken on the remaining balance owing. Marigold paid $2,500 cash for freight to ship the inventory to its location during the year. Marigold reported cost of goods sold for the year of $245,000. Marigold has a calendar year end. What is the balance in the inventory account at the end of the year? Balance $
At the beginning of the year, Culver Shipping Ltd., a company that has a perpetual inventory system, had $49,500 of inventory. During the year, inventory costing $198,000 was purchased. Of this, $23,300 was returned to the supplier and a 5% discount was taken on the remainder. Freight costs incurred by the company for inventory purchases amounted to $2,410. The cost of goods sold during the year was $196,400. (a) Determine the balance in the Inventory account at the end of the year. Balance in the inventory account $ eTextbook and Media List of Accounts GA Save for Later Attempts: 0 of 3 used Submit Answer
Whispering Winds Corporation uses a perpetual inventory system and had inventory worth $88,500 at the beginning of the year. Purchases were made during the year for $393,000; however, 10% of these goods were returned to the supplier, and a 3% discount was taken on the remaining balance owing. Whispering Winds paid $3,500 cash for freight to ship the inventory to its location during the year. Whispering Winds reported cost of goods sold for the year of $295,000. Whispering Winds has a calendar year end. What is the balance in the inventory account at the end of the year? Balance If Whispering Winds counted its actual inventory balance as $118,000 at the end of the year, what adjusting entry, if any, would be made? (Credit account titles are automatically indented when the 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. List all debit entries before credit entries.) Date Account Titles and…
Johnson Corporation began the year with inventory of 15,000 units of its only product. The units cost $7 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year: a. Purchased 75,000 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, n/30, and 100% of the purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased fo.b. shipping point and freight charges of $0.60 per unit were paid by Johnson. b. 1,500 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.60 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received. c. Sales for the year totaled 70,000 units at $19 per unit. d. On December 28, Johnson purchased 5,500 additional units at $11 each. The goods…
YE Company ships inventory to its branch at a mark-up of 125% of cost. The required balance of the allowance for overvaluation account is P1,425,000. During the year, the home office sent merchandise to the branch costing P9,000,000. At the start of the year, the branch's Statement of Financial Position shows P1,800,000 of inventory on hand that was acquired from the home office. How much is the amount to be debited to the allowance for overvaluation in branch inventory at the end of the year? A.1,225,000B.2,610,000C.1,425,000D.1,185,000
Camino Jet Engines, Inc. Is a supplier of jet engine parts. The company began the most reecent Fiscal Year with inventory of 75 units. The units cost 8,500 each. The company uses a perpetual inventory system to account for inventory. The following transactions occurred during the year. a. Purchases 50 additional units at a cost of $8,900 per unit. Terms of the purchases were 2/10, n/30, and payments was made within 10-days discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b shipping point. The company paid freight charges of $500 per unit b. 6 of the units purchased during the year were returned to the manufacturer for credit. The company were also given credit for the freight charges of $500 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received c. Sales for the year totaled…
ABC Co. sells one product, which it purchases from various suppliers. ABC’s trial balance at December 31, year 2, included the following accounts: Sales (33,000 units @ P16) P528,000; Sales discounts 7,500; Purchases 368,900; Purchase discounts 18,000; Freight-in 5,000; Freight-out 11,000 ABC Co.’s inventory purchases during year 2 were as follows: Units Cost per unit Total cost Beginning inventory, January 1 8,000 P8.20 P 65,600 Purchases, quarter ended March 31 12,000 8.25 99,000 Purchases, quarter ended June 30 15,000 7.90 118,500 Purchases, quarter ended September 30 13,000 7.50 97,500 Purchases, quarter ended December 31 7,000 7.70 53,900 Additional information ABC’s accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. ABC has determined that, at December 31, year 2, the replacement cost of its inventory was P8 per unit and the net realizable value was P8.80 per unit. ABC’s normal profit margin is P1.05…
SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Product 1 Product 2 Cost $50 $34 Replacement cost $48 $26 Selling price $70 $36 Selling costs $6 $4 Normal profit $10 $8 Determine the carrying value of SLR’s inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. What is the before-tax income effect of the LCM adjustment? Product Cost Market Per Unit Inventory Value Unit Cost Lower of Cost or Market 1 1,000 2 1,000 26,000 Cost Inventory value What is the before-tax income effect of the LCM adjustment? (higher by/lower by/no effect) _______ (amount)
Libscomb Technologies' annual sales are $6,615,140 and all sales are made on credit, it purchases $4,071,988 of materials each year (and this is its cost of goods sold). Libscomb also has $553,442 of inventory, $521,646 of accounts receivable, and beginning and ending of year $448,048 and $420,069 accounts payables (respectively). Assume a 365 day year. What is Libscomb’s Cash Cycle (in days)?
During its first year of operation, Archer Company purchased 5,600 units of a product at $21 per unit. During the second year, it purchased 6,000 units of the same product at $24 per unit. During the third year, it purchased 5,000 units at $30 per unit. Archer managed to have an ending inventory each year of 1,000 units. The company uses the periodic inventory system.Prepare cost of goods sold statements that compare the value of ending inventory and the cost of goods sold for each of the three years using 1.the FIFO inventory costing method. 2.the LIFO method. 3.From the resulting data, what conclusions can you draw about the relationships between the changes in unit price and the changes in the value of ending inventory?
AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 24,000 units of the company's one product. These units cost $15 each. During the year, 74,000 units were purchased at a cost of $18 each and 81,000 units were sold. Near the end of the fiscal year, management is considering the purchase of an additional 9,500 units at $18. 1. What would be the effect of this purchase on income before income taxes? 2. What would be the effect of this purchase on income before income taxes using FIFO method?
Statz Company had sales of $1,600,000 and related cost of goods sold of $1,150,000 for its first year of operations ending December 31, 20Y1. Statz provides customers a refund for any returned or damaged merchandise. At the end of 20Y1, Statz Company estimates that customers will request refunds for 1.5% of sales and estimates that merchandise costing $16,000 will be returned. Assume that on February 3, 20Y2, Buck Co. returned merchandise with an invoice amount of $5,000 for a cash refund. The returned merchandise originally cost Statz Company $3,200. a. Journalize the adjusting entries on December 31, 20Y1, to record the expected customer returns. If an amount box does not require an entry, leave it blank.