* Question 1 The management of Flounder Co, SA is reevaluating the appropriatene

Question

* Question 1 The management of Flounder Co, SA is reevaluating the appropriateness of using its present inventory cost flow method. They request your help in determining the results of operations for 2017 if either the FIFO method or the average-cost method hod been used. For 2017, the accounting records show the folowing data Beginning (11,700 units) 28,600 T Ending (17,550 units) Total net sales (263,250 units) Tatal cost of goods purchased (269,100 unitc) 1,012,050 843,687 Purchases were made quarterly as follows. 0,200 58,500 58,500 C2.92 3.12 3.22 204,984 182,520 188,370 269,100 843,697 Operating expenses were € 143,400, and the company's income tax rate is 32%. Question 1 Prepare comparative condensed income statements for 2017 under FIFO and averagc cost. (Round per unit cost to 3 decimal places, e.g. 15.125 and final answers to 0 decimal places, e.g. 125.) FLOUNDER Co, SA

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC fIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ balance 11700 2.45 28600 11700 2.45 28600 Purchasse Quarter-1 70200 2.92 204984 70200 2.92 204984 Quarter-2 58500 3.12 182520 58500 3.12 182520 Quarter-3 58500 3.22 188370 58500 3.22 188370 Quarter-4 81900 3.27 267813 64350 3.27 210425 17550 3.27 57388 TOTAL 280800 872287 263250 814899 17550 57388 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ balance 11700 2.45 28600 Purchasse Quarter-1 70200 2.92 204984 Quarter-2 58500 3.12 182520 Quarter-3 58500 3.22 188370 Quarter-4 81900 3.27 267813 TOTAL 280800 3.11 872287 263250 3.11 818708 17550 3.11 53579 CONDENSED INCOME STATEMENT FIFO AVERAGE sales revenue 1012050 1012050 Less: Cost of goods sold Begnining Inventory 28600 28600 Add: Purchases 843687 843687 Cost of Goods available for sale 872287 872287 Less: Ending Inventory 57388 53579 Cost of Goods sold 814899 818708 Gross margin 197151 193342 Lless: Operating expense 143400 143400 Net income before tax 53751 49942 Less: Tax @ 32% 17200 15981 Net Income after tax 36551 33961

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