The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2020 if either the FIFO or the LIFO method had been used. For 2020, the accounting records show these data: Purchases and Sales Beginning ( 7,000 units) $ 14,000 Total net sales ( 180,000 units) $ 747,000 Ending ( 17,000 units) Total cost of goods purchased ( 190,000 units) 466,000 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 50,000 $ 2.2 $ 110,000 2 40,000 2.35 94,000 3 40,000 2.5 100,000 4 60,000 2.7 162,000 190,000 $ 466,000 Operating expenses were $ 130,000, and the company’s income tax rate is 40%. Prepare comparative condensed income statements for 2020 under FIFO and LIFO
The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2020 if either the FIFO or the LIFO method had been used. For 2020, the accounting records show these data: Purchases and Sales Beginning ( 7,000 units) $ 14,000 Total net sales ( 180,000 units) $ 747,000 Ending ( 17,000 units) Total cost of goods purchased ( 190,000 units) 466,000 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 50,000 $ 2.2 $ 110,000 2 40,000 2.35 94,000 3 40,000 2.5 100,000 4 60,000 2.7 162,000 190,000 $ 466,000 Operating expenses were $ 130,000, and the company’s income tax rate is 40%. Prepare comparative condensed income statements for 2020 under FIFO and LIFO
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2020 if either the FIFO or the LIFO method had been used. For 2020, the accounting records show these data:
|
Purchases and Sales
|
||||||
| Beginning ( 7,000 units) | $ 14,000 | Total net sales ( 180,000 units) | $ 747,000 | |||
| Ending ( 17,000 units) | Total cost of goods purchased ( 190,000 units) | 466,000 |
Purchases were made quarterly as follows.
|
Quarter
|
Units
|
Unit Cost
|
Total Cost
|
|||
| 1 |
50,000
|
$ 2.2 |
$ 110,000
|
|||
| 2 |
40,000
|
2.35 |
94,000
|
|||
| 3 |
40,000
|
2.5 |
100,000
|
|||
| 4 |
60,000
|
2.7 |
162,000
|
|||
|
190,000
|
$ 466,000
|
Operating expenses were $ 130,000, and the company’s income tax rate is 40%.
Prepare comparative condensed income statements for 2020 under FIFO and LIFO
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education