In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items. In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items. To Determine: The net income under LIFO and FIFO methods.

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Answer 1

Question

Chapter 6, Problem 6.8E

(a)

To determine

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Determine: The net income under LIFO and FIFO methods.

(b)

To determine

The net cash provided by operating activities under LIFO and FIFO methods.

(c)

To determine

To Calculate: The quality of earnings ratio under LIFO and FIFO.

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A condensed income statement for Weber Associates and a partially completed vertical analysis follow. Required: 1. Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). 2. Does Cost of Goods Sold, as a percentage of Net Revenues, represent better or worse performance in 2019 as compared to 2018? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). (Decreases should be indicated by a minus sign. Round your answers to the nearest whole percent.) Net Revenues Cost of Goods Sold Research and Development Expense Sales and Marketing Expense General and Administrative Expense Income from Operations Other…

Use the following tables to answer the question: LOGIC COMPANY Income Statement For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Gross sales 19,800 15,600 Sales returns and allowances 900 100 Net sales 18,900 15,500 COGS 11,800 8,800 Gross profit 7,100 6,700 Depreciation 780 640 Selling and administrative expenses 2,800 2,400 Research 630 540 Miscellaneous 440 340 Total operating expenses 4,650 3,920 Income before interest and taxes 2,450 2,780 Interest expense 640 540 Income before taxes 1,810 2,240 Provision for taxes 724 896 LOGIC COMPANY Balance Sheet For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Current assets 12,300 9,400 Accounts receivable 16,900 12,900 Merchandise inventory 8,900 14,400 Prepaid expenses 24,400 10,400 Total current assets 62,500 47,100 Building (net) 14,900 11,400 Land 13,900 9,400 Total plant and equipment 28,800 20,800 Total assets 91,300 67,900 Accounts payable 13,400 7,400 Salaries payable 7,500 5,400 Total current…

Direction: Answer the problem below and forecasts the income statement using percent of sales method. (Please refer to the picture)

Answer 2

Question

Chapter 6, Problem 6.8E

(a)

To determine

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Determine: The net income under LIFO and FIFO methods.

(b)

To determine

The net cash provided by operating activities under LIFO and FIFO methods.

(c)

To determine

To Calculate: The quality of earnings ratio under LIFO and FIFO.

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Answer 3

Question

Chapter 6, Problem 6.8E

(a)

To determine

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Determine: The net income under LIFO and FIFO methods.

(b)

To determine

The net cash provided by operating activities under LIFO and FIFO methods.

(c)

To determine

To Calculate: The quality of earnings ratio under LIFO and FIFO.

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Answer 4

Question

Chapter 6, Problem 6.8E

(a)

To determine

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Determine: The net income under LIFO and FIFO methods.

(b)

To determine

The net cash provided by operating activities under LIFO and FIFO methods.

(c)

To determine

To Calculate: The quality of earnings ratio under LIFO and FIFO.

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Answer 5

Chapter 6, Problem 6.8E

(a)

To determine

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Determine: The net income under LIFO and FIFO methods.

(b)

To determine

The net cash provided by operating activities under LIFO and FIFO methods.

(c)

To determine

To Calculate: The quality of earnings ratio under LIFO and FIFO.

Answer 6

Chapter 6, Problem 6.8E

(a)

To determine

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Determine: The net income under LIFO and FIFO methods.

Answer 7

Chapter 6, Problem 6.8E

(a)

To determine

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Determine: The net income under LIFO and FIFO methods.

Answer 8

(b)

To determine

The net cash provided by operating activities under LIFO and FIFO methods.

Answer 9

(b)

To determine

The net cash provided by operating activities under LIFO and FIFO methods.

Answer 10

(c)

To determine

To Calculate: The quality of earnings ratio under LIFO and FIFO.

Answer 11

(c)

To determine

To Calculate: The quality of earnings ratio under LIFO and FIFO.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 6 - The key to successful business operations is...Ch. 6 - Prob. 2Q Ch. 6 - What is just-in-time inventory management? What...Ch. 6 - Prob. 4Q Ch. 6 - Prob. 5Q Ch. 6 - Prob. 6Q Ch. 6 - Prob. 7Q Ch. 6 - Prob. 8Q Ch. 6 - What is the major advantage and major disadvantage...Ch. 6 - The selection of an inventory cost flow method is...

Solution Summary: The author calculates the net income under LIFO and FIFO methods.

The net cash provided by operating activities under LIFO and FIFO methods.

To Calculate: The quality of earnings ratio under LIFO and FIFO.

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Chapter 6 Solutions