PROBLEM 5-5B
Prepare a correct detailed multiple-step income statement. Assume a tax rate of 25%.
WRIGHT COMPANY |
||
Income Statement |
||
For the Month Ended December 31, 2014 |
||
Sales Revenues |
||
Account title |
Amount |
|
Account title |
Amount |
|
Account title |
Amount |
|
Net Sales |
|
|
Cost of goods sold |
|
|
Gross profit |
Amount |
|
Operating Expenses |
|
|
Account title |
Amount |
|
Account title |
Amount |
|
Account title |
Amount |
|
Account title |
Amount |
|
Account title |
Amount |
|
Account title |
Amount |
|
Account title |
Amount |
|
Total operating expenses |
Amount |
|
Income from operations |
Amount |
|
Other revenues and gains |
||
Account title |
Amount |
|
Other expenses and losses |
||
Account title |
Amount |
Amount (Total) |
Income before income taxes |
|
|
Income tax expense |
|
|
Net Income |
|
|
P5-5B
An inexperienced accountant prepared this condensed income statement for
Wright Company, a retail firm that has been in business for a number of years.
WRIGHT COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Net sales $952,000
Other revenues 16,000
968,000
Cost of goods sold 548,000
Gross profit 420,000
Operating expenses
Selling expenses 160,000
Administrative expenses
104,000
264,000
Net earnings $156,000
As an experienced, knowledgeable accountant, you review the statement and determine
the following facts.
1. Net sales consist of sales $972,000, less freight-out on merchandise sold $20,000.
2. Other revenues consist of sales discounts $12,000 and interest revenue $4,000.
3. Selling expenses consist of salespersons’ salaries $88,000; depreciation on equip-
ment $4,000; sales returns and allowances $46,000; advertising $12,000; and sales
commissions $10,000. All compensation should be recorded as Salaries and Wages
Expense.
4. Administrative expenses consist of office salaries $54,000; dividends $14,000; utili-
ties $13,000; interest expense $3,000; and rent expense $20,000, which includes
prepayments totaling $2,000 for the first month of 2015. The utilities represent
utilities paid. At December 31, utility expense of $3,000 has been incurred but not
paid.
Problem 6-2B
(a) Determine the Cost of Goods Available for Sale
Date |
Explanation |
Units |
Unit Cost |
Total Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
(b) Determine the ending inventory and cost of goods sold under each of the assumed cost flow methods. Prove the accuracy of the cost of goods sold under FIFO and LIFO.
FIFO
(1) Ending Inventory |
(2) Cost of Goods Sold |
||||
Date |
Units |
Unit Cost |
Total Cost |
Cost of goods available for sale |
Amount |
|
Amount |
|
Amount |
Less: ending inventory |
Amount |
|
Amount |
|
Amount |
|
|
Total |
Amount |
Total |
Amount |
Cost of Goods Sold |
Amount |
Proof of Cost of Goods Sold (FIFO) |
|||
Date |
Units |
Unit Cost |
Total Cost |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
Total |
Amount |
Total |
Amount |
LIFO
(1) Ending Inventory |
(2) Cost of Goods Sold |
||||
Date |
Units |
Unit Cost |
Total Cost |
Cost of goods available for sale |
Amount |
|
Amount |
|
Amount |
Less: ending inventory |
Amount |
|
Amount |
|
Amount |
|
|
Total |
Amount |
Total |
Amount |
Cost of Goods Sold |
Amount |
Proof of Cost of Goods Sold (LIFO) |
|||
Date |
Units |
Unit Cost |
Total Cost |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
Total |
Amount |
Total |
Amount |
AVERAGE COST (Round to the nearest decimal, i.e., $1.01)
(1) Ending Inventory |
(2) Cost of Goods Sold |
||||
|
Units |
Unit Cost |
Total Cost |
Cost of goods available for sale |
Amount |
|
Amount |
|
Amount |
Less: ending inventory |
Amount |
Total |
Amount |
Total |
Amount |
Cost of Goods Sold |
Amount |
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?
Enter your answer here
|
P6-2B
Lifetime Distribution markets classic children’s books. At the beginning of June, Lifetime had in beginning inventory 1,200 books with a unit cost of $3. During June, Life- time made the following purchases of books.
June 3 4,000 @ $3 June 29 4,000 @ $6
June 18 7,500 @ $5
During June, 10,500 books were sold. Lifetime uses a periodic inventory system.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.)
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?
Problem 6-3B
(a) Determine the Cost of Goods Available for Sale
Date |
Explanation |
Units |
Unit Cost |
Total Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
(b) Determine the ending inventory and the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO and average-cost). Prove the accuracy of the cost of goods sold under each method.
FIFO
(1) Ending Inventory |
(2) Cost of Goods Sold |
||||
Date |
Units |
Unit Cost |
Total Cost |
Cost of goods available for sale |
Amount |
|
Amount |
|
Amount |
Less: ending inventory |
Amount |
|
Amount |
|
Amount |
|
|
Total |
Amount |
Total |
Amount |
Cost of Goods Sold |
Amount |
Proof of Cost of Goods Sold (FIFO) |
|||
Date |
Units |
Unit Cost |
Total Cost |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
Total |
Amount |
Total |
Amount |
LIFO
(1) Ending Inventory |
(2) Cost of Goods Sold |
||||
Date |
Units |
Unit Cost |
Total Cost |
Cost of goods available for sale |
Amount |
|
Amount |
|
Amount |
Less: ending inventory |
Amount |
|
Amount |
|
Amount |
|
|
Total |
Amount |
Total |
Amount |
Cost of Goods Sold |
Amount |
Proof of Cost of Goods Sold (LIFO) |
|||
Date |
Units |
Unit Cost |
Total Cost |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
Total |
Amount |
Total |
Amount |
AVERAGE COST (Round to the nearest decimal, i.e., $1.01)
(1) Ending Inventory |
(2) Cost of Goods Sold |
||||
|
Units |
Unit Cost |
Total Cost |
Cost of goods available for sale |
Amount |
|
Amount |
|
Amount |
Less: ending inventory |
Amount |
Total |
Amount |
Total |
Amount |
Cost of Goods Sold |
Amount |
(c) Which cost flow method results in the lowest inventory amount for the balance sheet? The lowest cost of goods sold for the income statement?
Enter your answer here
|
P6-3B
Smythe Company Inc. had a beginning inventory of 200 units of Product ERV at a cost of $6 per unit. During the year, purchases were:
Jan 24 800 units at $7 Aug. 19 600 units at $9
Apr 12 400 units at $8 Nov. 30 350 units at $10
Smythe Company uses a periodic inventory system. Sales totaled 1,900 units.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine the ending inventory and the cost of goods sold under each of the assumed cost
flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold
under the FIFO and LIFO methods. (Round average unit cost to three decimal places.)
(c) Which cost flow method results in the lowest inventory amount for the balance sheet?
The lowest cost of goods sold for the income statement?
Why Choose Us
Quality Papers
We value our clients. For this reason, we ensure that each paper is written carefully as per the instructions provided by the client. Our editing team also checks all the papers to ensure that they have been completed as per the expectations.
Professional Academic Writers
Over the years, our Acme Homework has managed to secure the most qualified, reliable and experienced team of writers. The company has also ensured continued training and development of the team members to ensure that it keep up with the rising Academic Trends.
Affordable Prices
Our prices are fairly priced in such a way that ensures affordability. Additionally, you can get a free price quotation by clicking on the "Place Order" button.
On-Time delivery
We pay strict attention on deadlines. For this reason, we ensure that all papers are submitted earlier, even before the deadline indicated by the customer. For this reason, the client can go through the work and review everything.
100% Originality
At Buy An Essay, all papers are plagiarism-free as they are written from scratch. We have taken strict measures to ensure that there is no similarity on all papers and that citations are included as per the standards set.
Customer Support 24/7
Our support team is readily available to provide any guidance/help on our platform at any time of the day/night. Feel free to contact us via the Chat window or support email: support@acmehomework.com.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Our Services
Buy An Essay has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.
Essays
At Buy An Essay, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.
Admissions
Admission and Business Papers
Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.
Editing
Editing and Proofreading
Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.
Coursework
Technical papers
We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.