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Explain the effects of inventory valuation methods on the cost of ending inventory, income, and income...
Explain the effects of inventory valuation methods on the cost of ending inventory, income, and income taxes.
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Effects of an Error in Ending Inventory Waymire Company prepared the partial income statements presented below...
Effects of an Error in Ending Inventory
Waymire Company prepared the partial income statements presented
below for 2019 and 2018.
2019
2018
Sales revenue
$538,200
$483,700
Cost of goods sold:
Beginning
inventory
$39,300
$32,100
Purchases
343,200
292,700
Cost of goods available
for sale
382,500
324,800
Ending inventory
(46,800)
335,700
(39,300)
285,500
Gross margin
$202,500
$198,200
Operating expenses
(167,200)
(151,600)
Income before taxes
$35,300
$46,600
During 2020, Waymire's accountant discovered that ending
inventory for 2018 had been understated by $6,500.
Restate the income statement to reflect LCM/NRV valuation of the ending inventory. Apply LCM/NRV on an...
Restate the income statement to reflect LCM/NRV valuation of the
ending inventory. Apply LCM/NRV on an item-by-item basis.
Compare the LCM/NRV effect on each amount that was changed in
the preliminary income statement in requirement 1.
Sales Revenue
$
144,000
Cost of Goods Sold
Beginning Inventory
$
16,000
Purchases
93,000
Goods Available for Sale
109,000
Ending Inventory
24,580
Cost of Goods Sold
84,420
Gross Profit
59,580
Operating Expenses
32,000
Income from Operations
27,580
Income Tax Expense (30%)
8,274
Net Income...
the management of Otto Corp. is considering the effects of various inventory costing methods on its...
the management of Otto Corp. is considering the effects of
various inventory costing methods on its financial statements and
its income tax expense. Assuming that the price the company pays
for inventory is increasing.
1. Which method will result in the lowest income tax
expense?
select a method
FIFOAverage Cost MethodLIFO
method will result in the lowest income tax expense.
2. Which method will provide the highest net income?
select a method
LIFOFIFOAverage Cost Method
method will provide the highest...
The management of Svetlana Corp. is considering the effects of inventory-costing methods on its financial statements...
The management of Svetlana Corp. is considering the effects of
inventory-costing methods on its financial statements and its
income tax expense. Assuming that the price the company pays for
inventory is increasing, which method will:
a. Provide the highest net income, LIFO or FIFO?
b. Provide the highest ending inventory, LIFO or FIFO?
c. Result in the lowest income tax expense, LIFO or FIFO?
The management of Svetlana Corp. is considering the effects of inventory-costing methods on its financial statements...
The management of Svetlana Corp. is considering the
effects of inventory-costing methods on its financial statements
and its income tax expense. Assuming that the price the company
pays for inventory is increasing, which method will:
a. Provide the highest net income, LIFO or
FIFO?
b. Provide the highest ending inventory, LIFO or
FIFO?
c. Result in the lowest income tax expense, LIFO or
FIFO?
There are several environment and resource valuation methods. Explain the Travel-cost method using an example of...
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Explain the Travel-cost method using an example of natural
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5.) How does absorption-cost valuation of inventory differ from variable-cost valuation of inventory? a. Absorption cost...
5.) How does absorption-cost valuation of inventory differ from
variable-cost valuation of inventory?
a. Absorption cost valuation of inventory includes fixed
manufacturing overhead.
b. Absorption cost valuation of inventory is always less than
variable cost valuation of inventory
c. Absorption cost valuation of inventory includes variable
selling costs.
d. Absorption cost valuation of inventory includes fixed selling
costs.
6.) One advantage of absorption costing is?
a. Companies can avoid using estimates in product costing.
b. Companies always report higher net...
Real Estate Finance: Of three standard valuation methods (comparable sales, income and replacement cost), describe which...
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A.
Single Family Home
B.
Church
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Carolina Company uses the LIFO method for valuing its ending inventory. The following financial statement information...
Carolina Company uses the LIFO method for valuing its ending
inventory. The following financial statement information is
available for its first year of operation:
Carolina Company
Income Statement
For the year ended December 31
Sales 60,000
Cost of Goods sold 23,000
Gross Profit 37,000
Expenses 13,000
Income before taxes $ 24,000
Carolina's ending inventory using the LIFO method was $8,700.
Carolina's accountant determined that had the company used FIFO,
the ending inventory would have been $9,100.
a. Determine what...
Calculate cost of goods sold and ending inventory under each of the following methods given the...
Calculate cost of goods sold and ending
inventory under each of the following methods given the
following information about purchases and sales during the
year.
Jan.
1
Beginning Inventory 300 units @
$3
Jan.
5
Sales
100 units
Jan. 15
Purchases
400 units @ $4
Jan. 20
Sales
200 units
a. FIFO.
b. LIFO.
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