The first two scenarios are <span>Hierarchical control and the third scenario is Decentralized control. </span>
Answer and Explanation:
As per the data given in the question,
a)
1. FIFO inventory > LIFO inventory
(Because in case of LIFO recent purchases are considered in production first or sold first so the remaining inventory are old inventory which is less costlier.)
2. FIFO cost of goods sold < LIFO cost of goods sold
(Because in case of LIFO recent purchases are considered in production first which are expensive so the cost of production is greater than FIFO.)
3. FIFO net income > LIFO net income
(Because cost of production is less under FIFO and the value of closing inventory is high, therefore the net income is also high.)
4. FIFO income taxes > LIFO income taxes
(Since, income is high in FIFO, therefore the tax under FIFO will be higher.)
b)
Management would like prefer to use LIFO over FIFO in periods of rising prices because Income shown in the company's Tax return will be higher if we use FIFO rather than using LIFO.
Answer:
depreciation expense 4,125 debit
accumulated depreciation 4,125 credit
Explanation:
computer equipment cost: 22,000
salvage value: zero
usefil life: 4
method of depreciation: straight-line
yearly depreciation: 5,500
Then, we need to depreciate from January 1st, 2018 to September 30th,2018
5,500 x 9/12 = 4,125 depreicaiton during the period
Answer and Explanation:
The preparation of the operating activities section is presented below:
Net income $409,000
Add: Accounts receivable decrease $37,300
Add: Depreciation expense 46,800
Add: Inventory decrease 44,500
Add Amortization expense 7,700
Less: Prepaid expenses increase -6,900
Less: Gain on sale of plant assets -6,300
Less: Accounts payable decrease -10,000
Add: Salaries payable increase -2,000
Net cash flow from operating activities $524,100
