The accounting records of Roberts Insulation, Inc., reflected the following balances as of January 1, 2013: Cash

Question:

The accounting records of Roberts Insulation, Inc., reflected the following balances as of

January 1, 2013:

Cash ................$36,000

Beginning inventory .......... 24,000 (200 units @ $120)

Common stock ............ 25,000

Retained earnings ........... 35,000

The following five transactions occurred in 2013:

1. First purchase (cash) ..........130 units @ $124

2. Second purchase (cash) ........220 units @ $128

3. Sales (all cash) .............350 units @ $320

4. Paid $24,000 cash for operating expenses.

5. Paid cash for income tax at the rate of 40 percent of income before taxes.


Required

a. Compute the cost of goods sold and ending inventory, assuming

(1) FIFO cost flow,

(2) LIFO cost flow,

(3) Weighted-average cost flow.

Compute income tax expense for each method.

b. Record the above transactions in general journal form and post to T-accounts assuming

(1) FIFO cost flow,

(2) LIFO cost flow,

(3) Weighted-average cost flow.

c. Use a vertical model to show the 2013 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.


Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamental financial accounting concepts

ISBN: 978-0078025365

8th edition

Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward

Question Posted: