The following information applies to the questions displayed below. Beck Inc. us

Question

The following information applies to the questions displayed below. Beck Inc. uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, prior year For the current year: 7,800 $10 Purchase, March 5 Purchase, September 19 Sale ($26 each) Sale ($28 each) Operating expenses (excluding income tax expense) 8 19,800 10,800 8,800 16,800 $408,000 value 2.00 points Required 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. (Loss amounts should be indicated with a minus sign.) BECK INC Income Statement For the Year Ended December 31, current year Case A FIFO Case B LIFO Cost of goods sold: Goods available for sale Cost of goods sold Pretax incomeloss

Explanation / Answer

Answer 1. BECK INC. Income Statement For the Year Ended Dec 31, Current Year Case A Case B FIFO LIFO Sales Revenue          699,200          699,200 Cost of Goods Sold: Beginning Inventory            78,000            78,000 Purchases          201,600          201,600 Goods Available For Sale          279,600          279,600 Ending Inventory            59,200          118,000 Cost of Goods Sold          220,400          161,600 Gross Margin          478,800          537,600 Operating Expenses          408,000          408,000 Pretax Income (Loss)            70,800          129,600 Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost 31-Dec Op. Inventory             7,800              10.00          78,000 5-Mar Purchases           19,800                 8.00        158,400 19-Sep Purchases           10,800                 4.00          43,200 Total           38,400        279,600 Calculation of Sales: Date Explanation Units Unit Cost Total Sales             8,800                    26        228,800 Sales           16,800                    28        470,400 Total           25,600        699,200 Ending Inventory (In Units) = 38,400 Units - 25,600 Units = 12,800 Units FIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Sep-17                10,800                4.00            43,200 Mar-17                   2,000                8.00            16,000 Total                12,800            59,200 Cost of Goods Sold: Cost of Goods available for sale          279,600 Less: Ending Inventory            59,200 Cost of Goods Sold          220,400 LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Dec-17                   7,800             10.00            78,000 Mar-17                   5,000                8.00            40,000 Total                12,800          118,000 Cost of Goods Sold: Cost of Goods available for sale          279,600 Less: Ending Inventory          118,000 Cost of Goods Sold          161,600

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