Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Question
Chapter 5, Problem 33P
a.
To determine
Show the amounts of each event in horizontal statement models under FIFO and LIFO.
b.
To determine
Compute net income using FIFO.
c.
To determine
Compute net income using LIFO.
d.
To determine
Explain the difference in the amount of income tax expenses incurred using the two cost flow assumption.
e.
To determine
Explain the manner in which the FIFO and the LIFO cost flow assumptions affect the statement of cash flows.
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The following transactions apply to Ozark Sales for 2018:
The business was started when the company received $50,000 from the issue of common stock.
Purchased equipment inventory of $176,500 on account.
Sold equipment for $197,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $122,000.
Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales.
Paid the sales tax to the state agency on $147,000 of the sales.
On September 1, 2018, borrowed $20,000 from the local bank. The note had a 7 percent interest rate and matured on March 1, 2019.
Paid $5,600 for warranty repairs during the year.
Paid operating expenses of $54,500 for the year.
Paid $125,300 of accounts payable.
Recorded accrued interest on the note issued in transaction no. 6.…
create a income statement for:
The following transactions apply to Ozark Sales for Year 1:
The business was started when the company received $50,000 from the issue of common stock.
Purchased equipment inventory of $380,000 on account.
Sold equipment for $510,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $330,000.
Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 2 percent of sales.
Paid the sales tax to the state agency on $400,000 of the sales.
On September 1, Year 1, borrowed $50,000 from the local bank. The note had a 4 percent interest rate and matured on March 1, Year 2.
Paid $6,200 for warranty repairs during the year.
Paid operating expenses of $78,000 for the year.
Paid $250,000 of accounts payable.
Recorded accrued interest on the note issued in transaction no. 6.
The Brick Company had cash sales of $221,600 for Year 1, Its first year of operation. On April 2, the company purchased 227 units of
Inventory at $190 per unit. On September 1, an additlonal 170 units were purchased for $209 per unit. The company had 49 units on
hand at the end of the year. The company's Income tax rate Is 40 percent. All transactions are cash transactlons.
Requlred
a. The preceding paragraph describes five accounting events: (1) a sales transaction, (2) the first purchase of Inventory, (3) a second
purchase of Inventory, (4) the recognition of cost of goods sold expense, and (5) the payment of Income tax expense. Show the
amounts of each event In horizontal statements models, assuming first a FIFO and then a LIFO cost flow.
b. Compute net Income using FIFO.
c. Compute net Income using LIFO.
e. Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet?
Complete this question by entering your answers in the tabs below.
Required A
Required B…
Chapter 5 Solutions
Survey Of Accounting
Ch. 5 - 1. What is the difference between accounts...Ch. 5 - Prob. 2QCh. 5 - 3. What type of account is the Allowance for...Ch. 5 - 4. What are two ways in which estimating...Ch. 5 - 5. When using the allowance method, why is...Ch. 5 - 6. What is the most common format for reporting...Ch. 5 - 7. Why is it necessary to mate an entry to...Ch. 5 - 8. What are some factors considered in estimating...Ch. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - 14. What is an advantage of using the percent of...Ch. 5 - 15. What is aging of accounts receivable?Ch. 5 - Prob. 16QCh. 5 - Prob. 17QCh. 5 - Prob. 18QCh. 5 - 21. What is accrued interest?Ch. 5 - How does the accrual of interest revenue or...Ch. 5 - Prob. 21QCh. 5 - Prob. 22QCh. 5 - Prob. 23QCh. 5 - Prob. 24QCh. 5 - Prob. 25QCh. 5 - 26. What types of costs do businesses avoid when...Ch. 5 - 1. Name and describe the four cost flow methods...Ch. 5 - 2. What are some advantages and disadvantages of...Ch. 5 - Prob. 29QCh. 5 - Prob. 30QCh. 5 - 5. In an inflationary period, which inventory cost...Ch. 5 - 6. In an inflationary period, which inventory cost...Ch. 5 - 7. What is the difference between the flow of...Ch. 5 - Prob. 34QCh. 5 - Prob. 35QCh. 5 - Prob. 36QCh. 5 - Prob. 37QCh. 5 - Prob. 38QCh. 5 - Prob. 39QCh. 5 - Prob. 1ECh. 5 - Exercise 7-1A Analysis of financial statement...Ch. 5 - Prob. 3ECh. 5 - Effect of recognizing uncollectible accounts...Ch. 5 - Analyzing financial statement effects of...Ch. 5 - Effect of recovering a receivable previously...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Roth Service Co. experienced the following...Ch. 5 - Prob. 11ECh. 5 - On May 1, 2018, Benzs Sandwich Shop loaned 10,000...Ch. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Luna Company accepted credit cards in payment for...Ch. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - The Shirt Shop had the following transactions for...Ch. 5 - Prob. 21ECh. 5 - Accounting for uncollectible accountstwo cycles...Ch. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Sage Inc. experienced the following transactions...Ch. 5 - The following transactions apply to Hooper Co. for...Ch. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - The following trial balance was prepared for Tile,...Ch. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 1ATCCh. 5 - Prob. 3ATCCh. 5 - Prob. 4ATCCh. 5 - Alonzo Saunders owns a small training services...
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- Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31. January 15 Purchased and paid for merchandise. The invoice amount was $15,200; assume a perpetual inventory system. April 1 Borrowed $774,000 from Summit Bank for general use; signed a 10-month, 9% annual interest-bearing note for the money. June 14 Received a $24,000 customer deposit for services to be performed in the future. July 15 Performed $3,450 of the services paid for on June 14. December 12 Received electric bill for $26,160. Vigeland plans to pay the bill in early January. December 31 Determined wages of $15,000 were earned but not yet paid on December 31 (disregard payroll taxes). Required: Prepare journal entries for each of these transactions. Prepare the adjusting entries required on December 31.arrow_forwardThe Brick Company had cash sales of $226,200 for Year 1, its first year of operation. On April 2, the company purchased 164 units of inventory at $175 per unit. On September 1, an additional 123 units were purchased for $193 per unit The company had 68 units on hand at the end of the year. The company's income tax rate is 40 percent All transactions are cash transactions. Required a. The preceding paragraph describes five accounting events: (1) a sales transaction, (2) the first purchase of inventory, (3) a second purchase of inventory, (4) the recognition of cost of goods sold expense, and (5) the payment of income tax expense. Record the amounts of each event in horizontal statements models like the following ones, assuming first a FIFO and then a LIFO cost flow b. Compute net income using FIFO. c. Compute net income using LIFO.arrow_forwardThe following transactions apply to Ozark Sales for Year 1: 1. The business was started when the company received $49,000 from the issue of common stock. 2. Purchased equipment inventory of $177,000 on account. 3. Sold equipment for $194,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $119,500. 4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 3 percent of sales. 5. Paid the sales tax to the state agency on $144,500 of the sales. 6. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2. 7. Paid $5,500 for warranty repairs during the year. 8. Paid operating expenses of $54,000 for the year. 9. Paid $125,100 of accounts payable. O. Recorded accrued interest on the note issued in transaction no. 6. Required a. Record the given transactions in a horizontal…arrow_forward
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