EXERCISE 3 (25 points) Darius Co. uses a perpetual inventory system. The company's beginning inventory of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
EXERCISE 3 (25 points) Darius Co. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: Beginning inventory (Jan. 1) Purchase (Jan. 15)... Purchase (Jan. 23).... Total (b) FIFO. (c) LIFO. Quantity 10 (5 points) 10 (5 points) 10 30 Unit Cost €27.50 €38.50 €30.00 Total Cost On January 20, Darius sells 20 units of this product. The other 10 units remain in inventory at January 31. €275 €385 1. Compute the cost of goods sold relating to the sale on January 20th and the ending inventory of units at January 31, end of the fiscal year, using the following cost flow assumptions: (a) Average cost. (5 points) €300 €960 2. Using the cost figures computed above, answer the following questions: (a) Which of the three cost flow assumptions will result in the company reporting the lowest net income for the current year? Would this always be the case? Explain. (2.5 points) (b) Which of the three cost flow assumptions will result in the highest income tax expense for the year? Would you expect this usually to be the case? Explain. (2.5 points) 3. Describe the reason for using a cost flow assumption to value an inventory. (5 points) EXERCISE 3 (25 points) Darius Co. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: Beginning inventory (Jan. 1) Purchase (Jan. 15)... Purchase (Jan. 23).... Total (b) FIFO. (c) LIFO. Quantity 10 (5 points) 10 (5 points) 10 30 Unit Cost €27.50 €38.50 €30.00 Total Cost On January 20, Darius sells 20 units of this product. The other 10 units remain in inventory at January 31. €275 €385 1. Compute the cost of goods sold relating to the sale on January 20th and the ending inventory of units at January 31, end of the fiscal year, using the following cost flow assumptions: (a) Average cost. (5 points) €300 €960 2. Using the cost figures computed above, answer the following questions: (a) Which of the three cost flow assumptions will result in the company reporting the lowest net income for the current year? Would this always be the case? Explain. (2.5 points) (b) Which of the three cost flow assumptions will result in the highest income tax expense for the year? Would you expect this usually to be the case? Explain. (2.5 points) 3. Describe the reason for using a cost flow assumption to value an inventory. (5 points)
Expert Answer:
Answer rating: 100% (QA)
Q1 a Average Cost Method Date Jan01 Beginning balance Jan15 Purchase Particulars Jan20 Sales Jan23 P... View the full answer
Related Book For
Fundamental Accounting Principles Volume 1
ISBN: 9781259259807
15th Canadian Edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
Posted Date:
Students also viewed these accounting questions
-
Pang Corporation owns 80 percert interest in Sunda Corporation. On January 1, 2016, Sunda purchased S100,000 par of Pang's $1,000,000 outstanding bonds for S98,000 in the bond market. Pang's bonds...
-
(30 pts, 6 each) X Systems, Ine. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of Jamuary were follows Quantity Unit...
-
Superior Company, selected account balances for the year ended December 31,2016 are provided below: Selling and administrative salaries Insurance, factory Utilities, factory Purchases of raw material...
-
Develop a two-period weighted moving average forecast for periods 12 through 15. Use weights of 0.7 and 0.3, with the most recent observation weighted higher. PERIOD DEMAND 10............ 248...
-
As a potential investment, you are evaluating a country/western night club called Pork Rinds and Silk Purses. You estimate a cost of $7,500,000 will be required to establish the facility. Also, you...
-
The Canton Corporation shows the following income statement. The firm uses FIFO inventory accounting. a. Assume in 20X2 that the same 17,600-unit volume is maintained, but that the sales price...
-
Meo Consulting, Inc., completed the following transactions during February 2010, its first month of operations: Requirements 1. Record transactions in the journal. Explanations are not required. 2....
-
Refer to the data in Problem 20-5A. Assume that Tamar uses the FIFO method to account for its process costing system. The following additional information is available: Tamar Co. manufactures a...
-
The following information relates to the pension plan for the employees of Sheridan Company: 1/1/25 12/31/25 12/31/26 Accum. benefit obligation $9740000 $10160000 $13100000 Projected benefit...
-
You are the IT director at Big Ten University. As part of a training program, you decide to draw a DM that includes some obvious mistakes to see whether your newly hired junior analysts can find...
-
1 . Write a Java program using the following methods: A method to fill the array with random numbers :the elements of the array should be random integers between 0 and 100 (declared as class...
-
Tommy Sharp was an electrical and instrumentation (E&I) designer for Aker Plant Services Group. Sharp began working for Aker as a contract employee in 2003, and then as a full-time employee in 2005....
-
John purchases State of Oklahoma general-purpose bonds at a cost of $3,400 in 2018. He receives $210 interest on the bonds in 2018 2019, and 2020. In 2020, he sells the bonds for $3,800. How much...
-
The following condensed balance sheet is for the partnership of Ludolf, Sambal, and Urad, who share profits and losses in the ratio of 6 : 2 : 2 , respectively: Cash $ 4 1 , 0 0 0 Liabilities $ 2 9 ,...
-
On December 31, 2022, Cruise Company has 15,000 units of an inventory item, which costs $45 per unit when purchased on June 15, 2022. The selling price was $80 per unit. On December 30, 2022, it was...
-
Distance, km 40- 30- 20- 10- 0. 0 Time, hours 1. During which time intervals is the object stationary? 2. During which time interval is the object accelerating (or decelerating) the fastest? 3....
-
For each of the following statements determine if the statement is TRUE, FALSE, or UNCERTAIN. You must justify your answer either graphically. No credit will be given without an explanation. [8...
-
For the following exercises, write the polynomial function that models the given situation. Consider the same rectangle of the preceding problem. Squares of 2x by 2x units are cut out of each corner....
-
You are the accountant at Global Consulting. The marketing manager is excited about the success of their new marketing campaign. She boasts, We spent $1 million on marketing in 2016 and we have al-...
-
Myra Sharma owns and operates a yoga studio, Green Yoga. Examine the following transactions and identify those that created expenses for Green Yoga. Prepare journal entries to record those...
-
Refer to Daniers financial statements in Appendix III. Is it possible to determine a cost of goods sold figure for Danier? If so, what is the cost of goods sold figure for Danier?
-
The following time-series plots both present estimates for the number of births per 1000 people worldwide for the years 19922014. Which of the following statements is more accurate? Explain your...
-
In the chapter introduction, we presented gas mileage data for 2016 model year hybrid and small non-hybrid cars. We will use histograms and back-to-back stem-and-leaf plots to compare the mileages...
-
Time-series data are discrete when observations are made at regularly spaced time intervals. The time-series data sets in this chapter are all discrete. Time-series data are continuous when there are...
Study smarter with the SolutionInn App