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2 years ago

Effect of different inventory cost flow methods on financial statements

Business

1 answer:

Viefleur [7K]2 years ago

5 0

Answer:

Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow. Compute the income tax expense for each method

FIFO LIFO WA

Sales 131.200 131.200 131.200

Cost of goods 62650 63850 63.317,92

Gross profit 68.550 67.350 67.882

Salaries 38000 38000 38000

EBiT 30.550 29.350 29.882

Income tax 637,5 7337,5 7470,518868

net Income 22.913 22.013 22.412

b. Record the above transactions in general journal form

Db Inventory 23250

Cr Cash 23250

Purcahse 1

Db Inventory 25600

Cr Cash 25600

Purchase 2

Db Cash 131200

Cr revenue 131200

Sales

Db Cost of goods 62650

Cr Inventory 62650

Cost of goods

Explanation:

Units Cost Price Cost Price

Begining Inventory 220 150 33.000

purchase 1 150 155 33.250

purchase 2 160 160

Sales 410 320 131.200

FIFO Units Cost Sale Price Cost Price Cost

Begining Inventory 220 150 220 33.000 33000

purchase 1 150 155 150 23.250 23250

purchase 2 160 160 40 25.600 6400

Sales 410 320 131.200 62650

LIFO Units Cost Sale Price Cost Price Cost of g

Begining Inventory 220 150 100 33.000 15000

purchase 1 150 155 150 23.250 23250

purchase 2 160 160 160 25.600 25600

Sales 410 320 131.200 63850

WA Units Cost Sale Price Cost Price Cost of g.

Begining Inventory 220 150 0 33.000 0

purchase 1 150 155 0 23.250 0

370 152 56.250

purchase 2 160 160 0 25.600 0

530 154 410 81.850 63.317,92

Sales 410 320 131.200

FIFO LIFO WA

Sales 131.200 131.200 131.200

Cost of goods 62650 63850 63.317,92

Gross profit 68.550 67.350 67.882

Salaries 38000 38000 38000

EBiT 30.550 29.350 29.882

Income tax 7637,5 7337,5 7470,518868

net Income 22.913 22.013 22.412

Db Inventory 23250

Cr Cash 23250

Purcahse 1

Db Inventory 25600

Cr Cash 25600

Purchase 2

Db Cash 131200

Cr revenue 131200

Sales

Db Cost of goods 62650

Cr Inventory 62650

Cost of goods

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3 years ago

the journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

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2 years ago

Brewster’s is considering a project with a 5-year life and an initial cost of $120,000. The discount rate for the project is 12

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Answer:

NPV = $27,792

Explanation:

Net Present Value = Present Value of Future Cash Flows - Initial Investments

To compute the Present value of Future Cash Flows, we need to first compute the cash inflows during the life of the project:

Year 1: 2,100 * 20 = $42,000

Year 2: 2,100 * 20 = $42,000

Year 3: 2,100 * 20 = $42,000

The units of Year 4 and Year 5 are calculated as follows:

⇒ (0.5 * 1,400) + (0.5 * 2,500) = 1,950 units

Year 4: 1,950 * 20 = $39,000

Year 5: 1,950 * 20 = $39.000

Now, discount the cash inflows at a rate of 12% to calculate the Present Value of Future Cash Flows

⇒ 42,000 + 42,000+ 42,000 + 39,000 + 39,000

(1.12)^1 (1.12)^2 (1.12)^3 (1.12)^4 (1.12)^5

⇒ 37,500 + 33,482 + 29,895 + 24,785 + 22,130

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2 years ago

At the beginning of the year, Cullumber Company had total assets of $864,000 and total liabilities of $523,000. (Treat each item

Radda [10]

Answer:

a. $583,000

b. $878,000

c. $330,000

Explanation:

In this question, we have to use the accounting equation which is presented below:

Total assets = Total liabilities + stockholder's equity

$864,000 = $523,000 + stockholder's equity

So, the stockholder's equity = $864,000 - $523,000 = $341,000

a. New assets = Old assets + addition

= $864,000 + $156,000

= $1,020,000

New liabilities = Old liabilities - reduction

= $523,000 - $86,000

= $437,000

So, the stockholder's equity = $1,020,000 - $437,000 = $583,000

b. New liabilities = Old liabilities + addition

= $523,000 + $91,000

= $614,000

New equity = Old equity - reduction

= $341,000 - $77,000

= $264,000

So, the total assets = New liabilities + New equity

= $614,000 + $264,000

= $878,000

c. New assets = Old assets - reduction

= $864,000 - $90,000

= $774,000

New equity = Old equity + addition

= $341,000 + $103,000

= $444,000

So, the total liabilities = $774,000 - $444,000 = $330,000

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