The management of Gresa Inc. requests your help in determining the results of operations for 2017 if either the FIFO or the LIFO method has been used. The company is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. For 2017, the accounting records show these data:

Inventories Purchases and Sales
Beginning (10,000 units) $ 20,000 Total net sales (239,000 units) $ 1,087,450
Ending (21,000 units) Total cost of goods purchased (250,000 units) 596,500
Purchases were made quarterly as follows.

Quarter Units Unit Cost Total Cost
1 65,000 $ 2.20 $ 143,000
2 55,000 2.30 126,500
3 55,000 2.40 132,000
4 75,000 2.60 195,000
250,000 $ 596,500
Operating expenses were $100,000, and the company's income tax rate is 40%.

Prepare comparative condensed income statements for 2017 under FIFO and LIFO.

GRESA INC.
Condensed Income Statements
For the Year Ended December 31, 2017
FIFO LIFO
Sales Revenue $ 1,087,450 $ 1,087,450
Cost of Goods Sold
Beginning Inventory 20,000 20,000
Cost of Goods Purchased 596,500 596,500
Cost of Goods Available for Sale
Ending Inventory
Cost of Goods Sold
Gross Profit / (Loss)
Operating Expenses
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)

Assume that all of thurmond company’s sales are credit sales. it has been the practice of thurmond company to provide for uncollectible accounts expense at the rate of one-half of one percent of net credit sales. for the year 20x1 the company had net credit sales of $2,021,000 and the allowance for doubtful accounts account had a credit balance, before adjustments, of $630 as of december 31, 20x1. during 20x2, the following selected transactions occurred: jan. 20 the account of h. scott, a deceased customer who owed $325, was determined to be uncollectible and was therefore written off. mar. 16 informed that a. nettles, a customer, had been declared bankrupt. his account for $898 was written off. apr. 23 the $906 account of j. kenney & sons was written off as uncollectible. aug. 3 wrote off as uncollectible the $750 account of clarke company. oct. 20 wrote off as uncollectible the $1,130 account of g. michael associates. oct. 27 received a check for $325 from the estate of h. scott. this amount had been written off on january 20 of the current year. dec. 20 cater company paid $7,000 of the $7,500 it owed thurmond company. since cater company was going out of business, the $500 balance it still owed was deemed uncollectible and written off. required: prepare journal entries for the december 31, 20x1, and the seven 20x2 transactions on the work sheets provided at the back of this unit. then answer questions 8 and 9 on the answer sheet. t-accounts are also provided for your use in answering these questions. 8. which one of the following entries should have been made on december 31, 20x1?

Self-interest achieve society’s economic goals because producers know which goods consumers want the most. as consumers and producers exercise their freedom to act in their own self-interest, markets will produce the desired goods at the lowest possible cost. consumers and producers both operate based on society’s economic goals. consumers know which goods can be produced at the lowest cost. there is a wide variety of desired goods and services in a market system because producers determine what to produce. consumers change their minds frequently. there is always a need to produce something new and improved. individual wants are diverse. what is produced is ultimately determined by consumers, because if the goods offered are not what consumers want, consumers will not buy them. producers, because they are driven by profits. producers, because they determine what to produce. consumers, because they participate in marketing surveys.

Suppose a holiday inn hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented. it operates 365 days per year. the amount of operating income on rooms, assuming an occupancy* rate of 80% for the year, that will be generated for the entire year is *occupancy = % of rooms rented