Question

Set 2.0 15 cm Please Choose 1 of the other. ARM Prob#4: Use the Following Information to Answer the Questions Below (show your work) The JW-Corp uses a Perpetual FIFO Method of Inventory Valuation 1. On May 1 The JW-Corp Authorized 200,000 Shares of $1 Par Value Common Stock 2. On May 2 The JW-Corp Issued 50,000 Shares of $1 Par Value Common Stock for $4 Each. 3. On May 10 The JW-Corp Bought 50 Bikes for $400 each, with a check. 4. On May 15 The JW-Corp Bought 50 Bikes for $600 each, on Account 5. On May 22 The JW-Corp received the May PGE Bill in the amount of $11,000 to be paid later. 6. On May 25 The JW-Corp Bought Back 5,000 Shares of Common Stock from Investors for $2.00 per Share with Checks 7. On May 28 The JW-Corp paid $.60 cents per Share to Corporate Shareholders with Checks 8. On May 30 The JW-Corp Sold 80 Bikes to the Gilroy Bike Shop for $1200 each, of which $44,000 was received in cash and the remainder amount was Billed to the Customer on account. 1) Compute the Gross Profit for the month ended May 31st 2) Compute the Net Income for the month ended May 31-st = Compute the Ending Retained Earnings Balance at May 31st =

Answer 1

1.gross profit	58,000
2.net income	47,000
3.ending retained earnings	20,000

working:

gross profit:

sales revenue (80*$1200)	96,000
less: cost of goods sold (as per perpetual FIFO)
50 bikes purchased on may 10 (50*400)	(20,000)
reamaining 30 bikes purchased on may 15 (30*600)	(18,000)
gross profit	58,000

net income:

gross profit	58,000
less: utilities bill	(11,000)
net income	47,000

ending retained earnings:

net income	47,000
less:dividends (50,000 - 5000 shares) * 0.60=> (45,000 shares*0.60)	(27,000)
ending retained earnings	20,000