2223_S09_hwk_7_solution - HA 2223 Spring 2009 Homework 7...

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HA 2223 – Spring 2009 Homework 7 Solution E7–2. (Italics for missing amounts only.) Case A Case B Case C Net sales revenue. .......... $8,000 $ 5,500 $6,000 Beginning inventory. ....... $11,200 $ 6,500 $ 4,000 Purchases ................... 5,000 8,550 9,500 Goods available for sale. 16,200 15,050 13,500 Ending inventory. ............ 10,200 11,050 9,000 Cost of goods sold. ......... 6,000 4,000 4,500 Gross profit ................... 2,000 1,500 1,500 Expenses ................... 400 1,800 700 Pretax income. ................ $ 1,600 $ (300 ) $ 800 E7–7. Req. 1 LUNAR COMPANY Income Statement For the Year Ended December 31, 2010 Case A Case B FIFO LIFO Sales revenue 1 ............................... $550,000 $550,000 Cost of goods sold: Beginning inventory. ............... $ 36,000 $ 36,000 Purchases. .............................. 210,000 210,000 Goods available for sale 2 246,000 246,000 Ending inventory 3................... 130,000 96,000 Cost of goods sold. .......... 116,000 150,000 Gross profit .................................. 434,000 400,000 Expenses .................................. 185,000 185,000 Pretax income. ................................ $249,000 $215,000 Computations: (1) Sales: (11,000 units @ $50) = $550,000
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E7–7. (continued) (2) Goods available for sale (for both cases): Units Unit Cost Total Cost Beginning inventory 3,000 $12 $ 36,000 Purchase, April 11, 2010 9,000 10 90,000 Purchase, June 1, 2010 8,000 15 120,000 Goods available for sale 20,000 $246,000 (3) Ending inventory (20,000 available – 11,000 units sold = 9,000 units): Case A FIFO: (8,000 units @ $15 = $120,000) + (1,000 units @ $10 = $10,000) = $130,000 . Case B
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2223_S09_hwk_7_solution - HA 2223 Spring 2009 Homework 7...

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