1. To determine Complete the income statement summary using the LIFO method and the periodic inventory system. Explanation Ending Inventory: It represents the quantity and price of the goods unsold and laying at the store at the end of a particular period. Cost of goods sold: Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads. Last-in-Last-Out: In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items. Working notes: Determine the amount of sales revenue: Sales revenue = Units sold × Sales per unit = 47Units × $ 24 , 500 = $ 1 , 151 , 500 (1) Determine the amount of cost of goods sold: Sales revenue = 2. To determine Restate the income statement using the LIFO method, assuming that the purchase is made on December 31. 3. To determine Describe the amount of pretax income change because of the decision on December 31, also explain is there any evidence of income manipulation.

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ISBN: 9781264038947

Author: Libby

Publisher: MCG

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Inventory Valuation

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Chapter 7, Problem 4P

To determine

Complete the income statement summary using the LIFO method and the periodic inventory system.

To determine

Restate the income statement using the LIFO method, assuming that the purchase is made on December 31.

To determine

Describe the amount of pretax income change because of the decision on December 31, also explain is there any evidence of income manipulation.

Expert Solution & Answer

Chapter 7 Solutions

INTRO TO FIN ACCT (LL W/ ACCESS-1 SMSTR

Ch. 7 - Prob. 3Q Ch. 7 - 4. Define goods available for sale. How does it...Ch. 7 - 5. Define beginning inventory and ending...Ch. 7 - 6. The chapter discussed tour inventory costing...Ch. 7 - 7. Explain how income can be manipulated when the...Ch. 7 - 8. Contrast the effects of LIFO versus FIFO on...Ch. 7 - 9. Contrast the income statement effect of LIFO...Ch. 7 - Prob. 10Q Ch. 7 - Explain briefly the application of the lower of...Ch. 7 - 12. When a perpetual inventory system is used,...

Ch. 7 - 1. Consider the following information: ending...Ch. 7 - 2. The inventory costing method selected by a...Ch. 7 - 3. Which of the following is not a component of...Ch. 7 - 4. Consider the following information: beginning...Ch. 7 - 5. Consider the following information: beginning...Ch. 7 - 6. An increasing inventory turnover...Ch. 7 - Prob. 7MCQ Ch. 7 - Which of the following regarding the lower of cost...Ch. 7 - 9. Which inventory method provides a better...Ch. 7 - Which of the following is false regarding a...Ch. 7 - Matching Inventory Items to Type of Business Match...Ch. 7 - Recording the Cost of Purchases for a...Ch. 7 - Identifying the Cost of Inventories for a...Ch. 7 - JCPenney Company, Inc., is a major department...Ch. 7 - M7-5 Matching Financial Statement Effects to...Ch. 7 - M7-6 Matching Inventory Costing Method Choices to...Ch. 7 - M7-7 Reporting Inventory under Lower of Cost or...Ch. 7 - M 7-8 Determining the Effects of Inventory...Ch. 7 - Determining the Financial Statement Effects of...Ch. 7 - Based on its physical count of inventory in its...Ch. 7 - Prob. 2E Ch. 7 - Prob. 3E Ch. 7 - Abercrombie and Fitch is a leading retailer of...Ch. 7 - Nittany Company uses a periodic inventory system....Ch. 7 - E7-6 Calculating Ending Inventory and Cost of...Ch. 7 - Emily Company uses a periodic inventory system. At...Ch. 7 - Givoly Inc. uses a periodic inventory system. At...Ch. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Following is partial information for the income...Ch. 7 - Daniel Company uses a periodic inventory system....Ch. 7 - H.T. Tan Company is preparing the annual financial...Ch. 7 - Sanchez Company was formed on January 1 of the...Ch. 7 - Dell Inc. is the leading manufacturer of personal...Ch. 7 - E7-1 5 Analyzing and Interpreting the Effects of...Ch. 7 - The following note was contained in a recent Ford...Ch. 7 - BorgWarner Inc. is a leading global supplier of...Ch. 7 - Several years ago, the financial statements of...Ch. 7 - Analyzing and Interpreting the Impact of an...Ch. 7 - Prob. 20E Ch. 7 - E7-21 (Chapter Supplement A) Analyzing the Effects...Ch. 7 - Assume that a retailer’s beginning inventory and...Ch. 7 - Prob. 23E Ch. 7 - Travis Company has just completed a physical...Ch. 7 - Prob. 2P Ch. 7 - Prob. 3P Ch. 7 - Analyzing and Interpreting Income Manipulation...Ch. 7 - Prob. 5P Ch. 7 - Jaffa Company prepared its annual financial...Ch. 7 - Evaluating the Effects of Manufacturing Changes on...Ch. 7 - An annual report for International Paper Company...Ch. 7 - The income statement for Pruitt Company summarized...Ch. 7 - P7-1 0 (Chapter Supplement A) Analyzing LIFO and...Ch. 7 - Prob. 1AP Ch. 7 - Prob. 2AP Ch. 7 - Prob. 3AP Ch. 7 - Analyzing and Interpreting the Effects of...Ch. 7 - Evaluating the Choice of Inventory Method When...Ch. 7 - Finding Financial Information Refer to the...Ch. 7 - Prob. 2CP Ch. 7 - Refer to the financial statements of American...Ch. 7 - Using Financial Reports: Interpreting the Effect...Ch. 7 - Prob. 5CP Ch. 7 - Prob. 6CP Ch. 7 - Prob. 7CP

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