Mgmt_200_Spring_2008_solutions_2-27-08(2,29)

Mgmt_200_Spring_2008_solutions_2-27-08(2,29) - Management...

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Management 200 – Introductory Financial Accounting– Spring 2008 Krannert School of Management - Purdue University Solutions to class assignment for February 27, 2008 E7–7. 1 LUNAR COMPANY Income Statement For the Year Ended December 31, 2007 Case A Case B FIFO LIFO Sales revenue 1 ...................................... $440,000 $440,000 Cost of goods sold: Beginning inventory. ................... 36,000 36,000 Purchases. .................................... 194,000 194,000 Goods available for sale 2 ..... 230,000 230,000 Ending inventory 3....................... 114,000 96,000 Cost of goods sold. ............... 116,000 134,000 Gross profit 324,000 306,000 Expenses 195,000 195,000 Pretax income $129,000 $111,000 Computations: (1) Sales: (11,000 units @ $40) = $440,000 (2) Goods available for sale (for both cases): Units Unit Cost Total Cost Beginning inventory 3,000 $12 $ 36,000 Purchase, April 11, 2007 9,000 10 90,000 Purchase, June 1, 2007 8,000 13 104,000 Goods available for sale
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Mgmt_200_Spring_2008_solutions_2-27-08(2,29) - Management...

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