Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 6, Problem 6.25AE
LO 4
(Learning Objective 4: Compute and evaluate gross profit percentage and inventory turnover) The Blue Heron Shop had the following inventory data:
| 2017 | 2018 | |
| Ending inventory at: | ||
| FIFO Cost ............... | $15,160 | $ 30,040 |
| LIFO Cost .............. | 12,440 | 18,520 |
| Cost of goods sold at: | ||
| FIFO Cost ................ | $ 81,360 | |
| LIFO Cost ................. | 92,880 | |
| Sales revenue ............ | 144,000 |
Company managers need to know the company’s gross profit percentage and rate of inventory turnover for 2018 under
1. FIFO.
2. LIFO.
Which method produces a higher gross profit percentage? A higher inventory turnover?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
(Learning Objectives 1, 2: Show how to account for inventory transactions; applythe FIFO cost method) Spear Corporation’s inventory records for its retail division show thefollowing at May 31:May 1 Beginning inventory ............... 10 units @ $160 = $1,60015 Purchase................................. 5 units @ 161 = 80526 Purchase................................. 14 units @ 170 = 2,380At May 31, 11 of these units are on hand. Journalize the following for Spear Corporation underthe perpetual system:1. Total May purchases in one summary entry. All purchases were on credit.2. Total May sales and cost of goods sold in two summary entries. The selling price was $560per unit, and all sales were on credit. Assume that Spear uses the FIFO inventory method.3. Under FIFO, how much gross profit would Spear earn for the month ending May 31? Whatis the FIFO cost of Spear Corporation’s ending inventory?
Paul Company uses its periodic inventory system and you are given the following
information:
Sales...
$65,100
$16,800
$14,700
$48,300
Inventory- Beginning.
Inventory- Ending...
Purchases....
............
How much is the gross profit?
A. $14,700.
B. $50,400.
C. $48,300.
D. $65,100.
LIFO, FIFO, & Moving Average Cost: Perpetual Inventory Methods:
Rock Shop shows the following data related to an item of inventory:
Inventory, January 1st..............
100 units @ $5.00
Purchase, January 9th............
300 units @ $5.40
Sold, January 11th..
Purchase, January 19th............
Purchase, January 21st....
Sold, January 28th....
325 units
70 @ $6.00
250 @$6.10
150 units
Please answer the following questions under the Perpetual Inventory Method:
1) What is the value of Ending Inventory & COGS under the FIFO Method?
2) What is the value of Ending Inventory & COGS under the LIFO Method?
3) What is the value of Ending Inventory & COGS under the Moving Avg. Cost Method?
Chapter 6 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 6 - Ravenna Candles recently purchased candleholders...Ch. 6 - Which inventory system maintains a running record...Ch. 6 - How is cost of goods sold classified in the...Ch. 6 - Snyders total cost of goods available for sale...Ch. 6 - Snyders cost of goods sold using the average-cost...Ch. 6 - Snyders ending inventory using the FIFO method...Ch. 6 - Snyders cost of goods sold using the LIFO method...Ch. 6 - Which U.S. GAAP principle or rule would apply if...Ch. 6 - Corrigan Corporation had beginning inventory of...Ch. 6 - Corrigans gross profit for the period is a.79,000....
Ch. 6 - What is Corrigans gross profit percentage (rounded...Ch. 6 - Prob. 12QCCh. 6 - A companys beginning inventory is 150,000, its net...Ch. 6 - An understatement of ending inventory by 2 million...Ch. 6 - Prob. 6.1ECCh. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - (Learning Objective 2: Apply the average-cost,...Ch. 6 - (Learning Objective 2: Compare income tax effects...Ch. 6 - LO 2 (Learning Objective 2: Apply the average-cost...Ch. 6 - (Learning Objective 2: Apply the FIFO method)...Ch. 6 - (Learning Objective 2: Apply the LIFO method)...Ch. 6 - (Learning Objective 2: Compare income, tax, and...Ch. 6 - LO 3 (Learning Objective 3: Apply the...Ch. 6 - (Learning Objective 4: Compute ratio data to...Ch. 6 - (Learning Objective 5: Estimate ending inventory...Ch. 6 - (Learning Objective 6: Analyze the effect of an...Ch. 6 - Prob. 6.14SCh. 6 - LO 1,2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 1,2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 2 (Learning Objective 2: Compare ending...Ch. 6 - (Learning Objective 2: Compare the tax advantage...Ch. 6 - Prob. 6.19AECh. 6 - LO 2 (Learning Objective 2: Compare ending...Ch. 6 - LO 2 (Learning Objective 2: Compare gross...Ch. 6 - Prob. 6.22AECh. 6 - LO 5 (Learning Objective 5: Compute cost of goods...Ch. 6 - Prob. 6.24AECh. 6 - LO 4 (Learning Objective 4: Compute and evaluate...Ch. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - LO 6 (Learning Objective 6: Analyze the effect of...Ch. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - Prob. 6.32BECh. 6 - LO 2 (Learning Objective 2: Apply the average,...Ch. 6 - Prob. 6.34BECh. 6 - Prob. 6.35BECh. 6 - Prob. 6.36BECh. 6 - Prob. 6.37BECh. 6 - Prob. 6.38BECh. 6 - Prob. 6.39BECh. 6 - Prob. 6.40BECh. 6 - Prob. 6.41BECh. 6 - Prob. 6.42BECh. 6 - Prob. 6.43QCh. 6 - Prob. 6.44QCh. 6 - Prob. 6.45QCh. 6 - The word market as used in the lower of cost or...Ch. 6 - Prob. 6.47QCh. 6 - Prob. 6.48QCh. 6 - Prob. 6.49QCh. 6 - In a period of rising prices, a.cost of goods sold...Ch. 6 - Prob. 6.51QCh. 6 - The following data come from the inventory records...Ch. 6 - Prob. 6.53QCh. 6 - Prob. 6.54QCh. 6 - Prob. 6.55QCh. 6 - Prob. 6.56QCh. 6 - Prob. 6.57QCh. 6 - Prob. 6.58QCh. 6 - Prob. 6.59QCh. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - Prob. 6.61APCh. 6 - LO 2 (Learning Objective 2: Compare inventory by...Ch. 6 - LO 2 (Learning Objective 2: Compare various...Ch. 6 - Prob. 6.64APCh. 6 - (Learning Objective 4: Compute and evaluate gross...Ch. 6 - LO 4, 5 (Learning Objectives 4, 5: Compute gross...Ch. 6 - Prob. 6.67APCh. 6 - Prob. 6.68APCh. 6 - Prob. 6.69BPCh. 6 - LO 2 (Learning Objective 2: Apply various...Ch. 6 - Prob. 6.71BPCh. 6 - LO 2 (Learning Objective 2: Compare various...Ch. 6 - LO 3 (Learning Objective 3: Explain GAAP and apply...Ch. 6 - Prob. 6.74BPCh. 6 - Prob. 6.75BPCh. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - Prob. 6.77BPCh. 6 - Prob. 6.78CEPCh. 6 - Prob. 6.79CEPCh. 6 - Prob. 6.80CEPCh. 6 - Prob. 6.81CEPCh. 6 - Prob. 6.82SCCh. 6 - Prob. 6.83DCCh. 6 - Prob. 6.85EICCh. 6 - Prob. 1FFCh. 6 - Prob. 1FA
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Use the following information: Net sales Cost of goods sold $235,000 168,000 52,000 42,000 Beginning inventory Ending inventory a. Calculate the inventory turnover ratio. b. Calculate the average days in inventory. c. Calculate the gross profit ratio.arrow_forwardBeginning inventory 74,000. Cost of goods purchased 530, 900. Cost of goods available for sale 604,900. Ending inventory 72,000. Cost of goods sold 532,900. What is the inventory turnover?arrow_forwardIf the estimated rate of gross profit is 30%, what is the estimated cost of the inventory on September 30, based on the following data? Sep. 1 Inventory (at cost) Sep. 1-30 Purchases, net (at cost) Sep. 1-30 Sales a. $36,060 Ob. $57,000 c. $179,014 Od. $84,140 $73,154 190,000 120,200arrow_forward
- Learning Objective 2: Compare ending inventory and cost of goods sold—FIFOvs. LIFO) Paulson’s specializes in sound equipment. Company records indicate the followingdata for a line of speakers:Unit Cost$4964JunDate12713ItemBalance...................Purchase.................Sale ........................Sale ........................Quantity18376Sale Price$115103Requirements1. Determine the amounts that Paulson’s should report for cost of goods sold and endinginventory two ways:a. FIFOb. LIFO2. Paulson’s uses the FIFO method. Prepare the company’s income statement for the monthended June 30, 2018, reporting gross profit. Operating expenses totaled $340, and theincome tax rate was 35%.arrow_forward1.6 The following information was extracted from the records of Boyle Stores for May 2020: May Units of Cost price per unit inventory Inventory on hand 4 000 01 R20 14 Purchases 20 000 R22 21 Purchases 16 000 R24 31 Sales for May 2020 22 000 The value of inventory on 31 May 2020, using the First-In-First-Out (FIFO) method is A R432 000 B R388 000 C R428 000 D R360 00arrow_forwardPROBLEM 2: FOR CLASSROOM DISCUSSION Gross profit rate 1. The following data relate to the records of Poweli Corp. for the month of September: Sales . P160,000 Beginning inventory Purchases .. P 20,000 180,000 P200,000 Goods available for sale Requirements: Using these data, estimate the cost of ending inventory for each situation below: a) b) Markup is 50 percent on cost. Markup is 60 percent on sales. Markup is 25 percent on cost. Markup is 40 percent on sales. c) d)arrow_forward
- If beginning inventory is $40,000, purchases are $215,000, and ending inventory is $35,000, what is cost of goods sold as determined by the cost of goods sold model? a.$140,000 b.$210,000 c.$220,000 d.$290,000arrow_forwardProblem 2: Inventory – Retail Method of Estimating Inventory Vancy Company uses the conventional retail inventory method (lower of cost or market) to estimate its ending inventory. Here is information for the current year. At Cost At Retail Beginning Inventory ........................ $70,800......... $ 98,500 Purchases ......................................... 219,500.......... 294,000 Purchase returns and allowances ........ 4,300.............. 5,500 Markups ..................................................................... 63,000 Markup cancellations ................................................. 10,000 Markdowns ................................................................ 35,000 Markdown cancellations ............................................ 20,000 Sales ......................................................................... 345,000 Sales returns and allowances…arrow_forwardA company purchased inventory as follows: 160 units at $8 320 units at $5 The average unit cost for inventory is Select one: a. $6.00. b. $7.50. C. S7.00. d. $6.70. Previousarrow_forward
- 20. By the gross profit method, the ending inventory, based on the following facts, should be Beginning inventory Net purchases 57,000 92,000 Net sales revenue Gross profit rate a. $134,000. b. $78,800. C. $55,200. d. $97,200. 77,000 40%arrow_forwardApplying the Cost of Goods Sold Model Charest Company has the following data for 2022: Item Units Cost Inventory, 12/31/2021 980 $10,780 Purchases 4,480 49,280 Inventory, 12/31/2022 750 8,250 Required: 1. How many units were sold? 2. Using the cost of goods sold model, determine the cost of goods sold.arrow_forwardBrief Exercise 6-17 (Algo) Calculate inventory ratios (LO6-7) Use the following information: Net sales $215,000 Cost of goods sold 152,000 Beginning inventory 48,000 Ending inventory 38,000 a. Calculate the inventory turnover ratio.b. Calculate the average days in inventory.c. Calculate the gross profit ratio.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License