The Devlin Corporation, a diversified distribution company, purchases cartons of canned tennis balls from the Questor Company and markets the balls under the Devlin brand name. Devlin started operations on January 1, 2016. In the table below, Quarter 1 represents the time period from January 1, 2016 to March 31, 2016 and Quarter 2 represents the time period from April 1, 2016 to June 30, 2016. Devlin began operations on January 1, 2016 with no inventory.
Purchases and sales data for Devlin's first two quarters of business are shown below:
Quarter 1
Sales 26,000 cartons at $37 per carton
Purchases
January: 5,000 cartons at $12
February: 10,000 cartons at $16
March: 15,000 cartons at $18
Quarter 2
Sales 63,000 cartons at $45 per carton
Purchases
April: 16,000 cartons at $20
May: 18,000 cartons at $24
June: 26,000 cartons at $30
PLEASE ANSWER ALL FOUR QUESTIONS BELOW.
1. Calculate the Quarter 2 ending inventories (in dollars) using the LIFO inventory valuation method.
2. Calculate Quarter 2 GROSS PROFIT using the LIFO inventory valuation method.
3. Calculate the Quarter 2 ending inventories (in dollars) using the FIFO inventory valuation method.
4. Calculate Quarter 2 GROSS PROFIT using the FIFO inventory valuation method.
The Devlin Corporation, a diversified distribution company, purchases cartons of canned tennis balls from the Questor Company and markets the balls under the Devlin brand name. Devlin started operations on January 1, 2016. In the table below, Quarter 1 represents the time period from January 1, 2016 to March 31, 2016 and Quarter 2 represents the time period from April 1, 2016 to June 30, 2016. Devlin began operations on January 1, 2016 with no inventory.
Purchases and sales data for Devlin's first two quarters of business are shown below:
Quarter 1
Sales 26,000 cartons at $37 per carton
Purchases
January: 5,000 cartons at $12
February: 10,000 cartons at $16
March: 15,000 cartons at $18
Quarter 2
Sales 63,000 cartons at $45 per carton
Purchases
April: 16,000 cartons at $20
May: 18,000 cartons at $24
June: 26,000 cartons at $30
PLEASE ANSWER ALL FOUR QUESTIONS BELOW.
1. Calculate the Quarter 2 ending inventories (in dollars) using the LIFO inventory valuation method.
2. Calculate Quarter 2 GROSS PROFIT using the LIFO inventory valuation method.
3. Calculate the Quarter 2 ending inventories (in dollars) using the FIFO inventory valuation method.
4. Calculate Quarter 2 GROSS PROFIT using the FIFO inventory valuation method.
Related questions
Please help on the following questions:) Thank you in advanced!
| The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: |
| Current assets as of March 31: | ||
| Cash | $ | 8,800 |
| Accounts receivable | $ | 25,200 |
| Inventory | $ | 47,400 |
| Building and equipment, net | $ | 114,000 |
| Accounts payable | $ | 28,425 |
| Capital stock | $ | 150,000 |
| Retained earnings | $ | 16,975 |
| a. | The gross margin is 25% of sales. |
| b. | Actual and budgeted sales data: |
| March (actual) | $63,000 |
| April | $79,000 |
| May | $84,000 |
| June | $109,000 |
| July | $60,000 |
| c. | Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. |
| d. | Each monthâs ending inventory should equal 80% of the following monthâs budgeted cost of goods sold. |
| e. | One-half of a monthâs inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. |
| f. | Monthly expenses are as follows: commissions, 12% of sales; rent, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets). |
| g. | Equipment costing $2,800 will be purchased for cash in April. |
| h. | Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. |
| Required: | |||||||||||||||||||||||||||||
| Using the data above: | |||||||||||||||||||||||||||||
| 1. | Complete the following schedule.
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2.) Complete the following:
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| Budgeted cost of goods sold for April = $79,000 sales à 75% = $59,250. | |||||||||||||||||||||||||||||||||||
| Add desired ending inventory for April = $63,000 Ã 80% = $50,400.
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3.)
| Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency, repayments and interest should be indicated by a minus sign.)
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4.)
| Prepare an absorption costing income statement for the quarter ended June 30.\
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5.)
| Prepare a balance sheet as of June 30.
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The following data relate to the operations of Shilow Company, awholesale distributor of consumer goods:
| Current assets as ofMarch 31: | ||
| Cash | $ | 8,500 |
| Accounts receivable | $ | 24,000 |
| Inventory | $ | 45,600 |
| Building and equipment, net | $ | 121,200 |
| Accounts payable | $ | 27,300 |
| Common stock | $ | 150,000 |
| Retained earnings | $ | 22,000 |
The gross margin is 25% of sales.
Actual and budgeted sales data:
| March (actual) | $ | 60,000 |
| April | $ | 76,000 |
| May | $ | 81,000 |
| June | $ | 106,000 |
| July | $ | 57,000 |
Sales are 60% for cash and 40% on credit. Credit sales arecollected in the month following sale. The accounts receivable atMarch 31 are a result of March credit sales.
Each monthâs ending inventory should equal 80% of the followingmonthâs budgeted cost of goods sold.
One-half of a monthâs inventory purchases is paid for in themonth of purchase; the other half is paid for in the followingmonth. The accounts payable at March 31 are the result of Marchpurchases of inventory.
Monthly expenses are as follows: commissions, 12% of sales;rent, $3,300 per month; other expenses (excluding depreciation), 6%of sales. Assume that these expenses are paid monthly. Depreciationis $909 per month (includes depreciation on new assets).
Equipment costing $2,500 will be purchased for cash inApril.
Management would like to maintain a minimum cash balance of atleast $4,000 at the end of each month. The company has an agreementwith a local bank that allows the company to borrow in incrementsof $1,000 at the beginning of each month, up to a total loanbalance of $20,000. The interest rate on these loans is 1% permonth and for simplicity we will assume that interest is notcompounded. The company would, as far as it is able, repay the loanplus accumulated interest at the end of the quarter.
Required:
Using the preceding data:
1. Complete the following schedule:
2. Complete the following:
3. Complete the following cash budget:
4. Prepare an absorption costing income statement for thequarter ended June 30.
5. Prepare a balance sheet as of June 30.
Complete the following schedule:
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Complete the following:
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Complete the following cash budget: (Cash deficiency, repaymentsand interest should be indicated by a minus sign.)
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Prepare an absorption costing income statement for the quarterended June 30.
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Prepare a balance sheet as of June 30.
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