Homework Answers
| Account Titles | Debit | Credit |
| Inventory | 50,000 | |
| Retained earnings | 50,000 |
Workings:
| Year 1 | Year 2 | Year 3 | Total | |
| Average | 150,000 | 200000 | 215000 | 565,000 |
| LIFO | 130000 | 180000 | 205000 | 515,000 |
Increase in income = 565,000 - 515,000 = 50,000
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8. Hyper Co. began operations on 1-1-Year 1. Net income before tax under three inventory methods...
7. Hyper Co. began operations on 1-1-Year 1. Net income before tax under three inventory methods...
7. Hyper Co. began operations on 1-1-Year 1. Net income before tax under three inventory methods for the first three years are shown below: Method FIFO Average LIFO Net Income (before taxes) Year 1 Year 2 Year 3 $175,000 $230,000 $250,000 $200,000 $215,000 $130,000 | $180,000 $205,000 Prepare the journal entry to record the change from the FIFO method to the Average method as of January 1, year 4:
E7-8 Evaluating the Effects of Inventory Methods on Income from Operations, Income Taxes, and Net Income...
E7-8 Evaluating the Effects of Inventory Methods on Income from Operations, Income Taxes, and Net Income (Periodic) [LO 7-3) Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,500 units at $25; purchases, 3,000 units at $28; operating expenses (excluding income taxes), S94,000; ending inventory per physical count at December 31, 1,000 units; sales price per unit, $75; and average income tax rate, 30%. Required: 1. Prepare income statements under the FIFO, LIFO, and weighted...
The Hasting Company began operations on January 1, 2013 and uses the FIFO method in costing...
The Hasting Company began operations on January 1, 2013 and uses the FIFO method in costing its raw material inventory. An analyst is wondering what net income would have been if the company had consistently followed LIFO instead of FIFO) from the beginning, 1/1/2013. He has the following information available to him: What would net income have been in 2014 if Hastings had used LIFO since 1/1/2013? O $ 110,000 O $ 150,000 O $ 170,000 O $ 230,000 12/31/2013...
Problem #1 Periodic Inventory Methods/Valuation Hyper Company had a beginning inventory on January 1 of 160...
Problem #1 Periodic Inventory Methods/Valuation Hyper Company had a beginning inventory on January 1 of 160 units of Product 4-18-19 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15 400 units at $23 Sept. 4 330 units at $26 July 20 250 units at $24 Dec. 2 100 units at $29 1,000 units were sold. Hyper Company uses a periodic inventory system. Instructions (a) Determine the cost of goods available for sale....
1. Harlequin Co. has used the LIFO retail method since it began op...
1. Harlequin Co. has used the LIFO retail method since it began operations in early 2015 (its base year). Its beginning inventory for 2016 was $36,000 at cost and $72,000 at retail prices. At the end of 2016, it computed its estimated ending inventory at retail to be $120,000. Assuming its cost-to-retail percentage for 2016 transactions was 60%, what is the inventory balance that Harlequin Co. would report in its 12/31/16 balance sheet? Hint: $64,800 2. Using the data from...
Below is the net income of Cheyenne Instrument Co., a private corporation, computed under the three...
Below is the net income of Cheyenne Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. FIFO 2018 2019 2020 2021 $26,200 27,100 27,900 31,800 Average Cost $22,900 22,100 25,900 27,400 LIFO $20,500 18,400 22,800 23,300 (Ignore tax considerations.) (a) Assume that in 2021 Cheyenne decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company’s interim income statements as originally reported under the LIFO method follow: 2016 2017 1stQ 2ndQ 3rdQ 4thQ 1stQ Sales $ 22,000 $ 24,000 $ 26,000 $ 28,000 $ 30,000 Cost of goods sold (LIFO) 5,200 6,200 7,000 8,200 9,700 Operating expenses 3,200 3,400 3,800 4,200 4,400 Income before...
Wildhorse Co. began operations on July 1. It uses a perpetual inventory system. During July, the...
Wildhorse Co. began operations on July 1. It uses a perpetual
inventory system. During July, the company had the following
purchases and sales.
Purchases
Date
Units
Unit Cost
Sales Units
July
1
5
$166
July
6
3
July
11
6
$180
July
14
5
July
21
7
$191
July
27
5
Calculate the average cost per unit at July 1, 6, 11, 14, 21
& 27. (Round answers to 2 decimal places, e.g.
$105.50.)
Average cost for each unit
July...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow: Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (40%) Net income lsto $ 32,000 6,200 4,200 $ 21,600 8,640 $ 12,960 2016 2 ndo 3rdo 4tho $ 34,000 $ 36,000 $...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow 2 3rd $ 24,000 $22.000 6,000 Isto $ 20,000 5,eee 3,eee $ 12,000 Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (40%) Net Income 4th $26.000 8,eee 4,000 $14,000 28.000 9.500...
7. Hyper Co. began operations on 1-1-Year 1. Net income before tax under three inventory methods for the first three years are shown below: Method FIFO Average LIFO Net Income (before taxes) Year 1 Year 2 Year 3 $175,000 $230,000 $250,000 $200,000 $215,000 $130,000 | $180,000 $205,000 Prepare the journal entry to record the change from the FIFO method to the Average method as of January 1, year 4:
E7-8 Evaluating the Effects of Inventory Methods on Income from Operations, Income Taxes, and Net Income (Periodic) [LO 7-3) Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,500 units at $25; purchases, 3,000 units at $28; operating expenses (excluding income taxes), S94,000; ending inventory per physical count at December 31, 1,000 units; sales price per unit, $75; and average income tax rate, 30%. Required: 1. Prepare income statements under the FIFO, LIFO, and weighted...
The Hasting Company began operations on January 1, 2013 and uses the FIFO method in costing its raw material inventory. An analyst is wondering what net income would have been if the company had consistently followed LIFO instead of FIFO) from the beginning, 1/1/2013. He has the following information available to him: What would net income have been in 2014 if Hastings had used LIFO since 1/1/2013? O $ 110,000 O $ 150,000 O $ 170,000 O $ 230,000 12/31/2013...
Below is the net income of Cheyenne Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. FIFO 2018 2019 2020 2021 $26,200 27,100 27,900 31,800 Average Cost $22,900 22,100 25,900 27,400 LIFO $20,500 18,400 22,800 23,300 (Ignore tax considerations.) (a) Assume that in 2021 Cheyenne decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show...
Wildhorse Co. began operations on July 1. It uses a perpetual
inventory system. During July, the company had the following
purchases and sales.
Purchases
Date
Units
Unit Cost
Sales Units
July
1
5
$166
July
6
3
July
11
6
$180
July
14
5
July
21
7
$191
July
27
5
Calculate the average cost per unit at July 1, 6, 11, 14, 21
& 27. (Round answers to 2 decimal places, e.g.
$105.50.)
Average cost for each unit
July...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow: Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (40%) Net income lsto $ 32,000 6,200 4,200 $ 21,600 8,640 $ 12,960 2016 2 ndo 3rdo 4tho $ 34,000 $ 36,000 $...
Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company's interim income statements as originally reported under the LIFO method follow 2 3rd $ 24,000 $22.000 6,000 Isto $ 20,000 5,eee 3,eee $ 12,000 Sales Cost of goods sold (LIFO) Operating expenses Income before income taxes Income taxes (40%) Net Income 4th $26.000 8,eee 4,000 $14,000 28.000 9.500...
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