ACCT 115 Chapter 6: Accounting Chapter 6

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amberserval592

8 Mar 2016

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Service company income statement: revenue expenses = net income, sales cost of goods sold = gross profit other expenses = net. 2/10, n/30: 2% discount if paid in 10 days, net 30 payment due in 30 days. Cost of goods sold + end balance = beginning balance + purchases. Gross profit margin (rate): gross profit net sales, sales revenue sales returns & allowances sales discounts. Flow assumption a pattern of transferring unit costs from the inventory account to the cogs that may (or may not) parallel the physical flow of merchandise. Average-cost method the only flow assumption in which all units of merchandise are assigned the same per-unit cost. Specific identification the method used to record the cost of goods sold when each unit in the inventory is unique. Lifo method the most conservative of the flow assumptions during a period of sustained inflation.

Related Questions

Multiple-Step Income Statement

The Carlsbad Company income statement for the year ended February 28, 20Y8 contains errors:

CARLSBAD COMPANY
Income Statement
For the Year Ended February 28, 20Y8
Sales		$4,220,000
Cost of goods sold		(2,650,000)
Operating income		$1,930,000
Expenses:
Selling expenses	$ 800,000
Administrative expenses	600,000
Delivery expense	50,000
Total expenses		(1,450,000)
Other expense:		480,000
Interest revenue		40,000
Gross profit		440,000

Prepare a corrected income statement for Carlsbad Company for the year ended February 28, 20Y8.

Carlsbad Company

Income Statement

For the Year Ended February 28, 20Y8

Sales

Cost of goods sold

Gross profit

Expenses:

Selling expenses

Administrative expenses

Delivery expense

Total expenses

Operating income

Other revenue:

Interest revenue

Net income

ambereel673


	Periodic Inventory Method

	Better Bottles, Inc. uses a PERIODIC inventory system and has the following information available:

	Description	# of Units	Cost per Unit	Total Cost
	Beginning inventory	20	$20.00	$400
	Jan 5 sold	15
	Jan 15 purchase	27	$22.00	594
	Jan 18 sold	21
	Jan 20 purchase	33	$30.00	990
	Total goods available for sale	80		$1,984

	Total goods sold	36


	Required:
1	Calculate both Cost of goods sold and Ending inventory using the Periodic FIFO Method.
2	Calculate both Cost of good sold and Ending Inventory using Periodic LIFO Method.
3	Use your calculations from 1-2 and complete the Income Statement.
	The company income tax rate:	0.25

1	FIFO Cost of Goods Sold - PERIODIC
	Units Sold Taken From:	# of Units	Cost per Unit	Total Cost


	Total Cost of Goods Sold FIFO


	FIFO Ending Inventory - PERIODIC
	Inventory Available	# of Units	Cost per Unit	Total Cost
	Beginning inventory
	+Purchase
	+Purchase
	(Less Cost of Goods Sold)
	Ending Inventory FIFO



2	LIFO Cost of Goods Sold - PERIODIC
	Units Sold Taken From:	# of Units	Cost per Unit	Total Cost


	Total Cost of Goods Sold LIFO


	LIFO Ending Inventory - PERIODIC
	Inventory Available	# of Units	Cost per Unit	Total Cost
	Beginning inventory
	+Purchase
	+Purchase
	(Less Cost of Goods Sold)
	Ending Inventory LIFO



3	Income Statement - Periodic Inventory Method
		FIFO	LIFO
	Sales revenue, net	25,000	25,000
	Cost of goods sold
	Gross profit
	Operating expenses	8,000	8,000
	Operating income before tax
	Income tax expense
	Net income

plumporpoise441

The income statement of Vince Gill Company is shown below.

	Vince Gill Company
	Income Statement
	For year ended December 31, 2014
Sales Revenue		$6,947,090
Cost of Goods Sold
Beginning inventory	$1,890,710
Purchases	4,323,810
Goods available for sale	6,214,520
Ending inventory	1,601,450
Cost of goods sold		4,613,070
Gross Profit		2,334,020
Operating expenses
Selling expenses	446,970
Admin expenses	709,920	1,156,890
Net income		1,177,130

1.		Accounts receivable decreased $316,040 during the year.
2.		Prepaid expenses increased $175,400 during the year.
3.		Accounts payable to suppliers of merchandise decreased $283,580during the year.
4.		Accrued expenses payable decreased $115,830 during theyear.
5.		Administrative expenses include depreciation expense of$54,760.

Prepare the operating activities section of the statement ofcash flows using the direct method.

rubymouse253

ACCT 115 Chapter 6: Accounting Chapter 6

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