The management of Swifty 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 2022 if either the FIFO or the LIFO method had been used. For 2022, the accounting records show these data: Inventories Purchases and Sales Beginning (8,000 units) $32,000 Total net sales (185,000 units) $1,137,750 Ending (13,000 units) Total cost of goods purchased (190,000 units) 846,000 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 50,000 $4.20 $210,000 2 40,000 4.35 174,000 3 40,000 4.50 180,000 4 60,000 4.70 282,000 190,000 $846,000 Operating expenses were $130,000, and the company’s income tax rate is 40%. 1. Prepare comparative condensed income statements for 2022 under FIFO and LIFO
The management of Swifty 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 2022 if either the FIFO or the LIFO method had been used. For 2022, the accounting records show these data: Inventories Purchases and Sales Beginning (8,000 units) $32,000 Total net sales (185,000 units) $1,137,750 Ending (13,000 units) Total cost of goods purchased (190,000 units) 846,000 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 50,000 $4.20 $210,000 2 40,000 4.35 174,000 3 40,000 4.50 180,000 4 60,000 4.70 282,000 190,000 $846,000 Operating expenses were $130,000, and the company’s income tax rate is 40%. 1. Prepare comparative condensed income statements for 2022 under FIFO and LIFO
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The management of Swifty 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 2022 if either the FIFO or the LIFO method had been used. For 2022, the accounting records show these data:
|
Inventories
|
Purchases and Sales
|
|||||
|---|---|---|---|---|---|---|
|
Beginning (8,000 units)
|
$32,000 |
Total net sales (185,000 units)
|
$1,137,750 | |||
|
Ending (13,000 units)
|
Total cost of goods purchased (190,000 units)
|
846,000 |
Purchases were made quarterly as follows.
|
Quarter
|
Units
|
Unit Cost
|
Total Cost
|
|||
|---|---|---|---|---|---|---|
|
1
|
50,000
|
$4.20 |
$210,000
|
|||
|
2
|
40,000
|
4.35 |
174,000
|
|||
|
3
|
40,000
|
4.50 |
180,000
|
|||
|
4
|
60,000
|
4.70 |
282,000
|
|||
|
190,000
|
$846,000
|
Operating expenses were $130,000, and the company’s income tax rate is 40%.
1. Prepare comparative condensed income statements for 2022 under FIFO and LIFO.
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