JoesTV - of goods sold. Below is a description of Frank's...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Joe's TV Sales (A) 1 Frank is the owner of Joe's TV. He purchased the business from Joe several years ago and decided to keep Joe's good name for the business. Frank specializes in selling a single model of a nationally known TV for a cash price of $300. Below is a description of Frank's inventory, purchases and sales for 1993. Units Cost per unit Total Beginning inventory (Jan.1, 1993) 2 $150 $300 Purchases: Feb. 8, 1993 2 160 320 May 14, 1993 4 170 680 Aug. 12, 1993 4 180 720 Oct. 28, 1993 2 190 380 Dec. 4, 1993 2 200 400 Total purchases 14 $2,500 Available for sale 16 $2,800 Goods sold during the year 11 Ending inventory 5 Required: Assume Joe's TV uses the periodic inventory system. Compute 1993 gross profit (revenue - COGS) under each of the following cost flow assumptions: a) First-in, first-out (FIFO) b) Last-in, first-out (LIFO) c) Average cost 1 Adopted from Bowen and Pfeiffer (1982)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Joe's TV Sales (B) Assume Frank elected to use LIFO for inventory valuation for the determination of cost
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: of goods sold. Below is a description of Frank's inventory, purchases and sales for 1994. Units Cost per unit Total Beginning inventory-LIFO (Jan. 1, 1994) Total 2 2 1 5 $150 160 170 $300 320 170 $790 Purchases during 1994 10 $200 $2,000 Available for sale 15 $2,790 Goods sold during 1994 14 Ending inventory- LIFO (December 31,1994) ? On December 30, 1994, Frank was trying to decide whether or not to purchase four additional TV sets from the local wholesale warehouse before the end of the fiscal year. If purchased, the units would cost $220 each. He won't be able to sell them until around the middle of next year (1995). Frank can borrow money at 10% and his marginal tax rate is 20%. Required: Should Frank purchase the four TV's before the end of the year? Should he purchase more?...
View Full Document

This note was uploaded on 04/20/2011 for the course ACC 101 taught by Professor Xyz during the Spring '11 term at Ohio State.

Page1 / 2

JoesTV - of goods sold. Below is a description of Frank's...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online