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The Brick Company had cash sales of $229,600 for Year 1, its first year of operation. On April 2, the company purchased 230 uBalance Sheet THE BRICK COMPANY Effect of Events on Financial Statements Panel 1: FIFO Cost Flow Income Statement Retained Re

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Answer #1

THE BRICK COMPANY

Effect of Events on Financial Statements

Panel 1: FIFO Cost Flow

Event No.

Balance Sheet

Income Statement

Cash Flows

Cash

+

Inventory

=

Retained Earnings

Revenue

-

Express

=

Net Income

1

229600

+

NA

=

229600

229600

-

=

229600

229600

OA

2

(56350)

+

56350

=

NA

NA

-

NA

=

NA

(56350)

OA

3

(46710)

+

46710

=

NA

NA

-

NA

=

NA

(46710)

OA

4

NA

+

(85510)

=

(85510)

NA

-

85510

=

(85510)

NA

NA

5

(57636)

+

NA

=

(57636)

NA

-

57636

=

(57636)

(57636)

NA

Bal.

68904

17550

86454

229600

143146

86454

68904

NC

1

229600

+

NA

=

229600

229600

-

=

229600

229600

OA

2

(56350)

+

56350

=

NA

NA

-

NA

=

NA

(56350)

OA

3

(46710)

+

46710

=

NA

NA

-

NA

=

NA

(46710)

OA

4

NA

+

(87135)

=

(87135)

NA

-

87135

=

(87135)

NA

NA

5

(56986)

+

NA

=

(56986)

NA

-

56986

=

(56986)

(56986)

NA

Bal.

69554

15925

85479

229600

144121

85479

69554

69554

230*245 = 56350

173*270 = 46710

Number of units sold = 230+173-65 = 338

Cost of goods sold (FIFO) = (230*245)+(108*270) = 85510

(229600-85510)*40% = 57636

Cost of goods sold (LIFO) = (173*270)+(165*245) = 87135

(229600-87135)*40% = 56986

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