Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale. Given: G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements. (a) To describe: The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods. (1) LIFO applied to units of product when the periodic inventory system is used. (2) Application of the dollar-value method to LIFO units of product.

Question

What is the result of the following transaction for Company A? Company A’s customer is unable to pay for a previous credit sale in accordance with Company A’s 90-day payment terms. The customer makes a promissory note to Company A that extends payment over a 24-month term including 5% interest. No result because the customer didn’t pay. Accounts receivable increases because of the interest. A note receivable is recorded in non-current assets. Company A records the loan as a liability.

Answer 1

Question

Chapter 8, Problem 8CA

To determine

Introduction:

Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.

Given:

G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements.

(a)

To describe:

The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods.

(1) LIFO applied to units of product when the periodic inventory system is used.

(2) Application of the dollar-value method to LIFO units of product.

To determine

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

To determine

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.

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What is the result of the following transaction for Company A? Company A’s customer is unable to pay for a previous credit sale in accordance with Company A’s 90-day payment terms. The customer makes a promissory note to Company A that extends payment over a 24-month term including 5% interest. No result because the customer didn’t pay. Accounts receivable increases because of the interest. A note receivable is recorded in non-current assets. Company A records the loan as a liability.

The income statement, which presents the results of operations, can be prepared in many forms including: Single Step Income Statement Condensed Income Statement Common Sized Income Statement All of the above

QUESTION 1 Rentokil Limited issued a 10-year bond on January 1 2011. It pays interest on January1. The below amortization schedule and interest schedule reflects this. Its year end isDecember 31. Requirements: a) Indicate whether the bonds were issued at a premium or a discount and explainhow you came to your decision. b) Compute the stated interest rate and the effective interest rate c) Prepare the journal entries for the following years:I. 2011, 2012 & 2018.

Answer 2

Question

Chapter 8, Problem 8CA

To determine

Introduction:

Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.

Given:

G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements.

(a)

To describe:

The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods.

(1) LIFO applied to units of product when the periodic inventory system is used.

(2) Application of the dollar-value method to LIFO units of product.

To determine

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

To determine

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8CA

To determine

Introduction:

Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.

Given:

G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements.

(a)

To describe:

The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods.

(1) LIFO applied to units of product when the periodic inventory system is used.

(2) Application of the dollar-value method to LIFO units of product.

To determine

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

To determine

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.

Expert Solution & Answer

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04:49

Answer 4

Question

Chapter 8, Problem 8CA

To determine

Introduction:

Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.

Given:

G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements.

(a)

To describe:

The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods.

(1) LIFO applied to units of product when the periodic inventory system is used.

(2) Application of the dollar-value method to LIFO units of product.

To determine

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

To determine

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8CA

To determine

Introduction:

Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.

Given:

G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements.

(a)

To describe:

The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods.

(1) LIFO applied to units of product when the periodic inventory system is used.

(2) Application of the dollar-value method to LIFO units of product.

To determine

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

To determine

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.

Answer 6

Chapter 8, Problem 8CA

To determine

Introduction:

Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.

Given:

G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements.

(a)

To describe:

The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods.

(1) LIFO applied to units of product when the periodic inventory system is used.

(2) Application of the dollar-value method to LIFO units of product.

Answer 7

Chapter 8, Problem 8CA

To determine

Introduction:

Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.

Given:

G Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. G Corporation plans to change from the lower of first-in first-out (FIFO)- cost or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change will also be made for its annual financial statements.

(a)

To describe:

The establishment of and subsequent pricing procedures for each of the following LIFO inventory methods.

(1) LIFO applied to units of product when the periodic inventory system is used.

(2) Application of the dollar-value method to LIFO units of product.

Answer 8

To determine

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

Answer 9

To determine

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

Answer 10

To determine

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.

Answer 11

To determine

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.

Answer 12

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Ch. 8 - Prob. 1Q Ch. 8 - 2. Why should inventories be included in (a) a...Ch. 8 - 3. What is the difference between a perpetual...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Prob. 8Q Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

(b) To distinguish: Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

(c) To discuss: The general advantages and disadvantages claimed for LIFO methods.

Chapter 8 Solutions

(b)

To distinguish:

Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.)

(c)

To discuss:

The general advantages and disadvantages claimed for LIFO methods.