Question

Johnson Corporation began 2018 with inventory of 18,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2018:

1. Purchased 90,000 additional units at a cost of $12 per unit. Terms of the purchases were 2/10, n/30, and 100% of the purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $0.60 per unit were paid by Johnson.
2. 1,800 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.60 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received.
3. Sales for the year totaled 85,000 units at $19 per unit.
4. On December 28, 2018, Johnson purchased 5,800 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2019.
5. 21,200 units were on hand at the end of 2018.

Required:
1. Complete the below table to determine the ending inventory and cost of goods sold for 2018.
2. Assuming that operating expenses other than those indicated in the above transactions amounted to $166,000, determine income before income taxes for 2018.

Answer 1

AnSwer The Method to vgke the enling inventoly fexlodis systkm Method whove theve s no acuglrecards of the inven fory qre malgtalnel It is calcylabel by' Grass Campany yses perfodic system and the LIFO Cost frofft methol, LIFO Costi method of inventovy val4qn 5 the system wheve gaods which come lask shoyll be sold firsh Iq this method Complete rcouls of Inuentuy qre maintalgel As theve i noporbruylay table povided, I hqve solved with my own table Caapytaban of Ending Javentory qut Cost of Goods solr for 2018. (9) Ending Inukatory. Ending Inventory from Cyrrent Pyrchares Enling Ioveătory Beginjing zquentovg (2/200 - 1f000) uniks 3200 ynitr. Pyrchgre Price qflev $112x(100-2)% + fijeght) $4(12X 98%)t o.50] $ 12:36 Djscount per 4ait.

Cost of Endiog znueg lory schelyle. Unjr cast Unjts Tobal ENing JouObry Rogining FNa by 2018 archis 194000 AVn tay 18000 12.36 39552 183552 3100 Cb) Cost of Goods sold Cost of Goals sold is to tal gmaynt of goods thgt has prolyced Jyring the year. cost of GGoods sold company dusing Iaven torg + Neb Begining znventöng Ruchases of Cest of Gools Sol Schelyle Amt.$)Amt. $) Partjcy) gos Begininy Inventary cl8o00 ynits x $ 8). +: Net archases f4ichgses (goo0o ynilis X $ 12) filght _Cacooo unis_X $0.60) -: Pyachase Rehurns C1800 ynibs x $a:6) (22630). 144000 log0000 54000 +: চিाच) [c90000- 1800) ynits X (12X2%)]| logo152 1234152 C183 ss) Cost of Grools Avqilble far Sqle ENig_Iaveabong Cost of GoodsSll 1050660

OR It n be glaocalulqe_by (ost of Goobs Soll Nymber of X Ryachase enitsSolt Prise 8 SDOO units x $12.36 $1050600 Caste of Goodó Sold Assuming the opevgking expenves other thyng thore igdisated transachons_amoyalel $166000, then igcome before gbove income taxes fov Lold inceme John sun Cexporaon Income Steltment for 2018 Amt.G Sales Cisp00units_X $ 19) -: Cost of Goods sold [6|so০० rosoroo) Guoss Piofit 564400 Operghing Expenie ((6s000) 1660 Income betove Income Taxes 398400