Chapter 8 - Solutions Manual 72 - Ethics Case 87...

  • University of Washington
  • ACC 320
  • Test Prep
  • MagistrateComputerWaterBuffalo42
  • 1
  • 17% (6) 1 out of 6 people found this document helpful

This preview shows page 1 out of 1 page.

Ethics Case 8–7 Requirement 1 Without purchase of the additional units: Sales (35,000 @ $60) $2,100,000 Cost of goods sold (35,000 x $30) (1,050,000) Gross profit $1,050,000 Due Jim Lester ($1,050,000 x 20%) = $210,000 With purchase of the additional units: Sales $2,100,000 Cost of goods sold: 20,000 x $40 $800,000 15,000 x $30 450,000 (1,250,000) Gross profit $ 850,000 Due Jim Lester ($850,000 x 20%) = $170,000 Requirement 2 Discussion should include these elements. Facts: If Moncrief purchases the additional units at the end of the year under a periodic LIFO inventory system, the transaction results in a reduced payment to Jim Lester, reduced profits to shareholders, and reduced income tax payments to government entities. By purchasing the additional units of Zelenex, Moncrief reduces Jim Lester's

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture