Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of $320,000 and the 500 units purchased to replace them cost $256,000, so his cash account has increased by $64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her heʼd “make at least $50,000 after taxes. That will give us $25,000 after paying off the investors.” Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales. Del has heard that the choice of an inventory cost flow assumption can have a significant effect on net income and taxes. He asks you to show him the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods. Review the worksheet FIFOLIFO that follows these requirements. Note that all of the problem data have been entered in the Data Section of the worksheet.

Question

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Answer 1

Textbook Question

Chapter 7, Problem 1R

Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of $320,000 and the 500 units purchased to replace them cost $256,000, so his cash account has increased by $64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her heʼd “make at least $50,000 after taxes. That will give us $25,000 after paying off the investors.”

Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales.

Chapter 7, Problem 1R, Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500

Del has heard that the choice of an inventory cost flow assumption can have a significant effect on net income and taxes. He asks you to show him the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods. Review the worksheet FIFOLIFO that follows these requirements. Note that all of the problem data have been entered in the Data Section of the worksheet.

Expert Solution & Answer

To determine

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Explanation of Solution

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 1

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 2

Table (1)

The formulae for the calculation are as follows:

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 3

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Students have asked these similar questions

Your cousin’s business is up and running. She is meeting inventory management issues and wants to solve the repeated problem once and for all. Each period, her company starts with 350 metal bars in stock. This stock is depleted every two weeks and reordered. The calendar year is comprised of 52 weeks.It costs $1.50 to hold every metal bar over the year. Every order comes at a fixed cost (unloading, storage and record of receipt) of $300.00. a) Calculate the total annual carrying costs and the restocking costs b) Explain in few sentences why this business does not follow an economically advisable strategy

Your cousin’s business is up and running. She is meeting inventory management issues and wants to solve the repeated problem once and for all. Each period, her company starts with 350 metal bars in stock. This stock is depleted every two weeks and reordered. The calendar year is comprised of 52 weeks.It costs $1.50 to hold every metal bar over the year. Every order comes at a fixed cost (unloading, storage and record of receipt) of $300.00 Your cousin places an order for 540 units of metal bar at a unit price of $62.00. The supplier offers terms of 1/10, net 30 A) Indicate how much time can you wait to pay before the account is overdue. If you take the full period, determine how much you will have to remit. b) Identify the discount being offered and the period left for payment to get the discount. If you do take the discount, determine how much you will have to remit.

Harvey quit his job at State University, where he earned $62,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $4,000 a year. To start the business, he cashed in $50,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 10,000 units of software at $72 for each unit. Of the $72 per unit, $60 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.

Answer 2

Textbook Question

Chapter 7, Problem 1R

Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of $320,000 and the 500 units purchased to replace them cost $256,000, so his cash account has increased by $64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her heʼd “make at least $50,000 after taxes. That will give us $25,000 after paying off the investors.”

Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales.

Chapter 7, Problem 1R, Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500

Del has heard that the choice of an inventory cost flow assumption can have a significant effect on net income and taxes. He asks you to show him the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods. Review the worksheet FIFOLIFO that follows these requirements. Note that all of the problem data have been entered in the Data Section of the worksheet.

Expert Solution & Answer

To determine

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Explanation of Solution

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 1

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 2

Table (1)

The formulae for the calculation are as follows:

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 3

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Answer 3

Textbook Question

Chapter 7, Problem 1R

Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of $320,000 and the 500 units purchased to replace them cost $256,000, so his cash account has increased by $64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her heʼd “make at least $50,000 after taxes. That will give us $25,000 after paying off the investors.”

Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales.

Chapter 7, Problem 1R, Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500

Del has heard that the choice of an inventory cost flow assumption can have a significant effect on net income and taxes. He asks you to show him the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods. Review the worksheet FIFOLIFO that follows these requirements. Note that all of the problem data have been entered in the Data Section of the worksheet.

Expert Solution & Answer

To determine

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Explanation of Solution

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 1

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 2

Table (1)

The formulae for the calculation are as follows:

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 3

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Answer 4

Textbook Question

Chapter 7, Problem 1R

Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of $320,000 and the 500 units purchased to replace them cost $256,000, so his cash account has increased by $64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her heʼd “make at least $50,000 after taxes. That will give us $25,000 after paying off the investors.”

Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales.

Chapter 7, Problem 1R, Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500

Del has heard that the choice of an inventory cost flow assumption can have a significant effect on net income and taxes. He asks you to show him the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods. Review the worksheet FIFOLIFO that follows these requirements. Note that all of the problem data have been entered in the Data Section of the worksheet.

Expert Solution & Answer

To determine

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Explanation of Solution

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 1

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 2

Table (1)

The formulae for the calculation are as follows:

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 3

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Explanation of Solution

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 1

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 2

Table (1)

The formulae for the calculation are as follows:

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 3

Answer 8

Expert Solution & Answer

To determine

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Explanation of Solution

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 1

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 2

Table (1)

The formulae for the calculation are as follows:

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 3

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Answer 12

Explanation of Solution

Prepare a worksheet to show the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods.

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 1

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 2

Table (1)

The formulae for the calculation are as follows:

Excel Applications for Accounting Principles, Chapter 7, Problem 1R , additional homework tip 3

Answer 13

Ch. 7 - Del Rio began Rio Enterprises on January 1 with...Ch. 7 - Del Rio began Rio Enterprises on January 1 with...Ch. 7 - Prob. 3R Ch. 7 - Del Rio began Rio Enterprises on January 1 with...Ch. 7 - What changes would have taken place if Dels...Ch. 7 - Suppose Dels purchase prices had remained...Ch. 7 - Del Rio began Rio Enterprises on January 1 with...Ch. 7 - Reset the November 20 purchase to 150 units,...Ch. 7 - Click the Chart sheet tab. On the screen is a...

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