Question

NAME DUE DATE 3/12/20 CROWN and PRINCE Crown & Prince are virtually identical companies, both companies began operations at the beginning of 2018 by issuing 20,000 shares, 35,00 par common stock $100,000 and long term debt of $200.000 During the year, both companies purchased inventory as follows: units Unit cost Jan-18 10,000 $4,00 Apr 18 10,000 $5.00 Aug-18 10.000 $800 Nov-18 10,000 $7.00 40,000 Total Cost 340.000 $50,000 $50.000 $70,000 $220,000 **** CROWN uses the first in, first-out (FIFO) method, and PRINCE uses the last-in, last-out (LIFO) method of inventory. Both companies sold 35.000 units. QUESTION 1: Compute the COST OF GOODS SOLD and INVENTORY for each company. SHOW YOUR CALCULATIONS CROWN COGS COGS Inventory Inventory Inventory *** During the year, both companies had sales (all for credit) of $500,000 QUESTION 2: Prepare the following portion of the Income Statement: CROWN PRINCE Sales Revenue COGS Gross Prof GP%

the last two photos are the questions to be answered

Answer 1

answer given elow in attachment

Answer 1 Crown Prince COGS: rate total cost COGS: total cost 4 5 total 40000 50000 60000 35000 Qty 18-Jan 10000 18-Apr 10000 18-Aug 10000 18-Nov 5000 35000 7 6 Qty rate 18-Nov 10000 18-Aug 10000 18-Apr 10000 18-Nov 5000 35000 total 70000 60000 50000 20000 6 185000 200000 Inventory : Inventory : qty rate total qty rate total Closing stock as per FiFo Closing stock as per LIFO 5000 20000 5000 7 35000

Answer 2 Crown Prince sales Revenue $500,000 sales Revenue $500,000 Less COGS $185,000 Less COGS $200,000 Gross profit $315,000 Gross profit $300,000 GP% 63.00% GP% 60.00% formula for GP gross profit / sales *100 formula for GP gross profit / sales *100

answer 3 Crown Prince crown % of estimated uncollectable account Receivable Prince 3% current 1-30 3 1-60 61-90 above 90 total 50000 25000 15000 10000 10000 110000 2% 5% 10% 20% 35% % change AR 500000 (all sales on credit) 1000 1250 1500 2000 3500 9250 Bad debt expense mense 15000 Bad debt expense 9250 answer 4 Crown Prince Depreciation as per straight line method Depreciation as per double decling method equipment price useful life 200000 10 years 200000 10 years equipment price useful life salvage value rate doule declining rate salvage value 10 rate 20% dep balance 40000 160000 dep 2018 20000 dep 2015

Answer 5 Crown Prince Income statement Income statement sales Revenue $500,000 sales Revenue $500,000 Less COGS $185,000 Less COGS $200,000 | Gross profit GP% Less selling & administrative exp: $315,000 63.00% Gross profit GP% Less selling & administrative exp: $300,000 60.00% Dep Baddebt expense other SGA 20000 15000 175000 Dep Baddebt expense other SGA 40000 9250 175000 Total 210000 Total 224250 $105,000 $75,750 net income before income tax (315000-210000) net income before income tax (300000-224250) $31,500 less income tax @ 30% (105000 - 30%) less income tax @ 30% (75750*30% $22,725 net income I $73,500 net income $53,025

answer 6 Prince Crown Retained Earnings Retained Earnings Retained earnings Retained earnings net income less dividend $73,500 10000 net income less dividend 53025 10000 Retained earnings for year as on 31/12/2018 $63,500 Retained earnings for year as on 31/12/2018 43025 answer 7 Crown Prince eps net income - preference dicvidend avg common stock outstanding net income - preference dicvidend avg common stock outstanding 20000 shares outstanding 20000 shares outstanding eps 73500 20000 53025 20000 eps 3.675 2.65125