# Question: The Patterson Company sells two products Tog and Uni Tog

The Patterson Company sells two products, Tog and Uni. Tog sells for $ 850 per unit, and Uni has a price of $ 1,300. Patterson uses the perpetual inventory system and uses the net price method of ac-counting for purchase discounts. On December 1, 2010, Patterson had 70 units of Tog at a cost of $ 400 each and 20 units of Uni at a cost of $ 740 each. During the month of December 2010, Patterson had the following transactions:

Dec. 1 Purchased 20 units of Tog from Quirin Corporation on account for $ 410 each; terms 2 10, n 30, FOB destination.

3 Sold six units of Uni to Mahoney Corporation on account; terms n/ EOM (end- of- month) and FOB destination.

4 Paid $ 88 freight on the shipment to Mahoney.

5 Purchased 25 units of Uni from Deitz Co. on account for $ 760 each; terms 1 15, n 30, FOB destination.

15 Sold 30 units of Tog to the Utica Corporation on account; terms n 30, FOB shipping point.

16 Returned five units of Uni that were defective to Deitz Co.

20 Paid the amount due to Deitz Co.

22 Sold 25 units of Uni to Tasco Corp. for cash.

30 Collected amount due from Mahoney Corporation from December 3 sale.

31 Paid amount due to Quirin Corporation.

Required

A. Make the entries for these transactions using the FIFO cost flow assumption.

B. Make the entries for these transactions using the LIFO cost flow assumption.

C. What is the amount of gross margin and ending inventory under FIFO?

D. What is the amount of gross margin and ending inventory under LIFO?

E. What is the difference in the gross margin, ending inventory, and cash flows between these two methods?

Dec. 1 Purchased 20 units of Tog from Quirin Corporation on account for $ 410 each; terms 2 10, n 30, FOB destination.

3 Sold six units of Uni to Mahoney Corporation on account; terms n/ EOM (end- of- month) and FOB destination.

4 Paid $ 88 freight on the shipment to Mahoney.

5 Purchased 25 units of Uni from Deitz Co. on account for $ 760 each; terms 1 15, n 30, FOB destination.

15 Sold 30 units of Tog to the Utica Corporation on account; terms n 30, FOB shipping point.

16 Returned five units of Uni that were defective to Deitz Co.

20 Paid the amount due to Deitz Co.

22 Sold 25 units of Uni to Tasco Corp. for cash.

30 Collected amount due from Mahoney Corporation from December 3 sale.

31 Paid amount due to Quirin Corporation.

Required

A. Make the entries for these transactions using the FIFO cost flow assumption.

B. Make the entries for these transactions using the LIFO cost flow assumption.

C. What is the amount of gross margin and ending inventory under FIFO?

D. What is the amount of gross margin and ending inventory under LIFO?

E. What is the difference in the gross margin, ending inventory, and cash flows between these two methods?

**View Solution:**## Answer to relevant Questions

The Rust Corporation has gathered the following information for activities during 2010: Credit sales ......................................................................................... $ 3,500,000 Cash sales ...Xanetics, Inc., recently received a $ 150,000 special order from Lartech, Inc., for some customized equipment. A 50 percent deposit accompanied the order, with the remaining $ 75,000 payment to be made at delivery. Xanetics ...How does rate of return on an investment differ from return on investment? What are the advantages of using a rate of return on investment when choosing among alternative investments? What is the present value of $ 10,000 five years from today if interest is? A. 10 percent compounded annually? B. 10 percent compounded semiannually? C. 10 percent compounded quarterly? D. Why do the answers above change? How much will an investment of $ 9,000 be worth at the end of five years if it earns? A. 3 percent interest compounded monthly? B. 4 percent interest compounded monthly? C. 3 percent interest compounded semimonthly? D. 4 ...Post your question