Brooks Photography: CGS and inventory, FIFO, LIFO, Wgted average, income stmt Th

Question

Brooks Photography: CGS and inventory, FIFO, LIFO, Wgted average, income stmt
The accounting records of Brooks Photography, Inc., reflected the following balances as of January 1, 2012:

Cash $19,000
Beginning Inventory 6,750 (75 units $90)
Common Stock 7,500
Retained Earnings 18,250

The following five transactions occurred in 2012:
1. First purchase (cash) 100 units @ $92
2. Second purchase (cash) 175 units @ $100
3. Sales (all cash) 300 units @ $170
4. Paid $15,000 cash for operating expenses.
5. Paid cash for income tax at the rate of 30 percent of income before taxes.

Please help with required items:

A. Compute the cost of goods sold and ending inventoy, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted- average cost flow.

B. Use a vertical model to prepare the 2012 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Record the events under an accounting equation before preparing the statements).

Explanation / Answer

A. Compute the cost of goods sold and ending inventoy, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted- average cost flow.

                                         FIFO
                                Units Price   Total
Beg. Inv.                      75     90      6,750  
Purchases                   100    92     9,200
Purchases                   175   100   17,500
Total                          350            33,450
COGS
                                   75     90     6,750
                                  100    92     9,200
                                  125 100    12,500
Total COGS                300          28,450
Ending Inventory        50  100     5,000

                                       LIFO
                                Units Price    Total
Beg. Inv.                      75   90        6,750  
Purchases                   100   92      9,200
Purchases                   175  100     17,500
Total                          365             33,450
COGS
                                  175   100    17,500
                                  100    92     9,200
                                   25    90       2,250
Total COGS                 300           28,950
Ending Inventory           50   90      4,500


                                  Weighted Average
                                Units Price    Total
Beg. Inv.                      75   90        6,750  
Purchases                   100   92      9,200
Purchases                   175  100     17,500
Total                          350             33,450
Average           33,450 / 365 = $91.6438
COGS                        300    95.57 28,671
Ending Inventory           50 95.57    4,779

B. Use a vertical model to prepare the 2012 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Record the events under an accounting equation before preparing the statements).

Income Statement                            
================       FIFO         LIFO    Wt.Avg.
Sales revenue
300 units @$170       $51,000    $51,000   $51,000
Less: COGS              $28,450    $28,950   $28,671
Gross Profit             $22,550    $22,050   $22,329
Operating exp.        $15,000    $15,000   $15,000
Income before
income tax              $7,550      $7,050     $7,329
Income tax 30%       $2,265      $2,115     $2,199
Income after tax $5,285     $4,935 $5,130

Balance Sheet
============
Assets
======
Current Assets
-----------------
Cash                    $26,035     $26,185     $26,101
Inventory               $5,000       $4,500      $4,779
Total Assets         $31,035     $23,500    $30,880

Liabilities
=========
Shareholders' Equity
-----------------------
Common Stock    $7,500       $7,500      $7,500
Retained
Earnings
Beg. Balance      $18,250     $18,250     $18,250
Net Income         $5,285       $4,935       $5,130
Total Liab. &
Shareholders'
Equity              $31,035     $30,685      $30,880

Cash Flow
=========                              FIFO          LIFO        Average
Beginning balance                 $19,000     $19,000     $19,000
Sales                                   $51,000     $51,000      $51,000
Total Cash Inflow                 $70,000     $70,000      $70,000
Less: Cash disbursement
Operating expense              $15,000      $15,000      $15,000
Purchases (33,450-6,750) $26,700      $26,700      $26,700
Income tax                           $2,265       $2,115        $2,199
Total disbursement             $43,965     $43,815       $43,899
Ending cash balance            $26,035     $26,185       $26,101




                   

  

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.