Johnstone Co. uses the periodic inventory system. The following information abou

Question

Johnstone Co. uses the periodic inventory system. The following information about their inventory of Model ZZ Mountain Bicycles is available: During the year, 235 bicycles were sold at a price of $1,500 each. Other operating costs equaled $80,000 and their tax rate is 30%. Round final answers to the nearest dollar. What was ending inventory and cost of goods sold on 12/31 under the FIFO cost flow assumption? $51,000 and $194,100 $48,200 and $196,900 $49,851 and $195,249 None of the above. What was ending inventory and cost of goods sold on 12/31 under the LIFO cost flow assumption? $51,000 and $194,100 $48,200 and $196,900 $49,851 and $195.249 None of the above. In the case of a cash dividend, a dividend liability comes into existence on the date of declaration. date of record. date of dividend payment. last day of the month in which the dividend is declared. None of the above is correct. Haloran reported the following asset and liability balances at the end of 20D and 20E During 20E, cash dividends of $80,000 were declared and paid. Additional capital stock was issued for $100,000. Therefore, the net income (or net loss) for 20E was $400,000 $480,000 $380,000 $300,000 none of the above.

Explanation / Answer

Periodical Inventory       8 Inventory Using FIFO Details Unit Rate Amt $ Sales revenue Opening Balance 50 800                                        40,000 Purchases 4/12. 80 820                                        65,600 7/8. 75 840                                        63,000 9/22. 90 850                                        76,500 Total Purchase 245                                      205,100 Total Goods available for sale 295                                      245,100 Sales 235 Closing Stock 60 Clsing Stock value by FIFO From Purchase of 9/22 60 850                                        51,000 Total Sales 235                                      194,100 0 Cost of Ending Inventory 12/31 $      51,000 Cost of Goods sold   $    194,100 Option a is correct. Periodical Inventory       9 Inventory Using LIFO Details Unit Rate Amt $ Sales revenue Opening Balance 50 800                                        40,000 Purchases 4/12. 80 820                                        65,600 7/8. 75 840                                        63,000 9/22. 90 850                                        76,500 Total Purchase 245                                      205,100 Total Goods available for sale 295                                      245,100 Sales 235 Closing Stock 60 Clsing Stock value by LIFO From beginning inventory 50 800                                        40,000 from purchase of 4/12 10 820                                          8,200 Total ending inventory 60                                        48,200 Total Sales 235                                      196,900 0 Cost of Ending Inventory 12/31 $      48,200 Cost of Goods sold   $    196,900 Option B is correct.     10 In the case of cash dividend , the   dividend liability arises on the date of dividend declaration option A is correct.     11 20D 20E Total Assets      6,800,000    7,600,000 Total Liab    3,200,000    3,600,000 Total Stockholders'equity    3,600,000    4,000,000 Cash        750,000        920,000 Assume net income in 20E =k So , 3600000+k+100000-80000=4000000 k=380,000 So Net Income in 20E =$380,000 Option C is correct.

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