Ch. 7 Handout

# Ch. 7 Handout - three requirements should be typed Cost of...

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Rachel Riddle Accounting 240 Section 003 11-8-06 CHAPTER 7 - HOMEWORK HANDOUT Provided below is an inventory acquisition schedule for Quincy Company: Unit Units Cost Beginning Inventory 2,000 \$10 Purchases: January 3,000 9 April 4,000 8 August 2,000 7 November 1,000 6 During the year, Quincy Company sold 9,000 units for \$12 each. All operating expenses (i.e., selling, general, and administrative expenses) amounted to \$20,000. The company’s income tax rate was 30%. Requirements: 1. Complete the following chart comparing cost of goods sold and ending inventory (assume Quincy uses a periodic inventory system, which is the system illustrated in class). Be sure to show your calculations in completing the chart. For the sake of saving you time, those calculations may be hand-written on an attached page, but the completion of the chart and the other

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Unformatted text preview: three requirements should be typed. Cost of Rachel Riddle Accounting 240 Section 003 11-8-06 Ending Inventory Goods Sold Total FIFO 20,000 79,000 99,000 LIFO 29,000 70,000 99,000 Weighted Average 33,000 66,000 99,000 2. What does the Total column represent? The total represents the amount of goods available for sale. 3. Using the data provided and your Cost of Goods Sold amounts in the table above, prepare a multiple-step income statement for EACH of the three methods. 4. Will the company pay more or less in taxes if it uses FIFO as compared to LIFO? How much more or less? Rachel Riddle Accounting 240 Section 003 11-8-06 The company will pay less in taxes using FIFO because of deflation. The company is paying \$2,700 less....
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Ch. 7 Handout - three requirements should be typed Cost of...

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