Business, 04.11.2020 22:00 11132772

The management of Patel Co. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. They request

your help in determining the results of operations for 2019 if either the FIFO

method or the LIFO method had been used. For 2019, the accounting

records show the following data.

Inventories Purchases and

Sales

Beginning (15,000 units) $32,000

Total net sales (217,000 units)

$865,000

Ending (28,000 units)

Total cost of goods purchased

(230,000 units) 600,000

Purchases were made quarterly as follows.

Quarter Units Unit Cost Total Cost

1 60,000 $2.40 $144,000

2 50,000 2.50 125,000

3 50,000 2.70 135,000

4 70,000 2.80 196,000

Total 230,000 $600,000

Operating expenses were $147,000, and the company’s income tax rate is

34%.

Instructions

(a) Prepare comparative condensed income statements for 2019 under

FIFO and LIFO. (Show computations of ending inventory.)

(b) Answer the following questions for management.

(1) Which cost flow method (FIFO or LIFO) produces the more

meaningful inventory amount for the balance sheet? Why?

(2) Which cost flow method (FIFO or LIFO) produces the more

meaningful net income? Why?

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 08:30

Match the items with the actions necessary to reconcile the bank statement.(there's not just one answer)1. interest credited in bank account2. fee charged by bank for returned check3. checks issued but not deposited4. deposits yet to be crediteda. add to bank statementb. deduct from bank statementc. add to personal statementd. deduct from personal statement

Answers: 2

Answer

Business, 22.06.2019 11:20

Lusk corporation produces and sells 14,300 units of product x each month. the selling price of product x is $25 per unit, and variable expenses are $19 per unit. a study has been made concerning whether product x should be discontinued. the study shows that $72,000 of the $102,000 in monthly fixed expenses charged to product x would not be avoidable even if the product was discontinued. if product x is discontinued, the annual financial advantage (disadvantage) for the company of eliminating this product should be:

Answers: 1

Answer

Business, 22.06.2019 23:30

Which statement best describes the two reactions? abcl, + h2 → 2hci2h + h = he + inreaction a involves a greater change, and reaction b involves a change in element identity.reaction b involves a greater change and a change in element identityreaction a involves a greater change and a change in element identity.reaction b involves a greater change, and reaction a involves a change in element identity.

Answers: 1

Answer

Business, 23.06.2019 00:40

On june 3, teal company sold to chester company merchandise having a sale price of $2,600 with terms of 2/10, n/60, f.o.b. shipping point. an invoice totaling $91, terms n/30, was received by chester on june 8 from john booth transport service for the freight cost. on june 12, the company received a check for the balance due from chester company. prepare journal entries on the teal company books to record all the events noted above under each of the following bases. (1) sales and receivables are entered at gross selling price. (2) sales and receivables are entered at net of cash discounts.

Answers: 3

Answer

You know the right answer?

The management of Patel Co. is reevaluating the appropriateness of using its present inventory cost...

Questions