ACC 210 Lecture Notes - Lecture 6: Gross Profit, Current Asset, Net Income
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ABC Company is preparing for an audit. To begin with, they areevaluating the balances in each account of the trial balance. Usingthe attached trial balance, enter the balances for the followingaccounts:
Cash: $7,500
Finished goods inventory: $1,000 Receivables: $500
Machinery and equipment: $3,000 Building: $5,000
Common stock: $11,500
Bank loan (to be repaid in 3 years): $4,000 Accounts payable:$500
Sale of goods produced: $3,000
Cost of goods sold: $1,500
Interest expense: $500
Enter the category (current and non-current asset/liability,equity, income statement).
| TRIAL BALANCE | ||||
| Category (Current/Non-currentAsset/Liability/ Income Statement, Equity) | Debit (+) | Credit (-) | ||
| Cash | Current Asset | |||
| Finished goods | Current Asset | |||
| Receivables | Current Asset | |||
| Machinery and Equipment | Non current asset | |||
| Building | Non current asset | |||
| Common Stock | equity | |||
| Bank Loans | Non current asset | |||
| Accounts Payable | current liability | |||
| Sale of Goods Produced | income statement | |||
| Cost of Goods Sold | income statement | |||
| Depreciation | income statement | |||
| Interest Expense | income statement | |||
| - | - | |||
| 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 | |||||||||
Altira Corporation uses a periodic inventory system. Thefollowing information related to its merchandise inventory duringthe month of August 2018 is available:
| Aug.1 | Inventory on handâ2,000 units;cost $6.10 each. |
| 8 | Purchased 10,000 units for $5.50each. |
| 14 | Sold 8,000 units for $12.00each. |
| 18 | Purchased 6,000 units for $5.00each. |
| 25 | Sold 7,000 units for $11.00each. |
| 31 | Inventory on handâ3,000 units |
Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using each of thefollowing cost flow methods.
FIFO
LIFO
Average Cost
Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using the FIFO method.(Round "Cost per Unit" to 2 decimal places.)
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Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using LIFO method.(Round "Cost per Unit" to 2 decimal places.)
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Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using Average costmethod. (Round "Average Cost per Unit" to 2 decimal places.)
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