Chapter 7 Practice Problems

# Chapter 7 Practice Problems - Mackenzie Inc. reported the...

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Sales Revenue 187,600 164,000 Cost of Goods Sold Beginning Inventory 12,300 9,100 Purchases 114,500 101,600 Goods Available 126,800 110,700 Ending Inventory 14,600 12,300 Cost of Goods Sold 112,200 98,400 Gross Profit 75,400 65,600 Operating Expenses 32,900 26,700 Net Income 42,500 38,900 2010 2009 Mackenzie Inc. reported the following comparative income statement for the years ended June 30, 2010 and 2009: During 2010, Mackenzie discovered that the 2009 ending inventory, as previously reported, was underestimated by \$2,100. Prepare the corrected comparative income statement for the two year period. What was the effect of the error on net income for the two years combined?

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Which inventory method results in the lowest net income during a period of declining inventory costs? a. FIFO b. LIFO c. Periodic System d. Perpetual System Suppose Ironman, Inc lost its entire inventory in a flood. Beginning inventory was \$43,000, purchases totaled \$524,000 and sales came to \$875,000. Ironman’s gross profit % was 44%. How much inventory did Ironman lose in the flood?
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## This note was uploaded on 12/17/2010 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas.

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Chapter 7 Practice Problems - Mackenzie Inc. reported the...

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