current-assets-part-ii

# The schedule suggests that gonzales should have 5000

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Unformatted text preview: edule. The schedule suggests that Gonzales should have 5,000 units on hand at the end of the year. Assume that Gonzales conducted a physical count of inventory and confirmed that 5,000 units were actually on hand. Based on the information in the schedule, we know that Gonzales will report sales of \$304,000. This amount is the result of selling 7,000 units at \$22 (\$154,000) and 6,000 units at \$25 (\$150,000). The dollar amount of sales will be reported in the income statement, along with cost of goods sold and gross profit. How much is cost of goods sold and gross profit? The answer will depend on the cost flow assumption adopted by Gonzales. Download free ebooks at bookboon.com 29 Inventory Costing Methods Current Assets: Part II 6.8 FiFO If Gonzales uses FIFO, ending inventory and cost of goods sold calculations are as follows, producing the financial statements at right: Beginning inventory 4,000 X \$12 = \$48,000 + GONZALES CHEMICAL COMPANY I ncome Statement For the Year Ending December 31, 20XX Net purchases (\$232,000 total) 6,000 X \$16 = \$96,000 8,000 X \$17 = \$136,000 REVENUES Net sales COST OF GOODS SOLD Beginning inventory, Jan. 1 Net purchases Goods available for sale Less: Ending inventory, Dec. 31 Cost of goods sold GROSS PROFIT Cost of*** available for sale (\$280,000 total) goods 4,000 X \$12 = \$48,000 6,000 X \$16 = \$96,000 8,000 X \$17 = \$136,000 195,000 \$109,000 GONZALES CHEMICAL COMPANY B alance Sheet December 31, 20XX ASSETS = ... I nventory Cost of goods sold (\$195,000 total) 4,000 X \$12 = \$48,000 6,000 X \$16 = \$96,000 3,000 X \$17 = \$51,000 85,000 Please click the advert + \$ 48,000 232,000 \$280,000 85,000 ... = Ending inventory (\$85,000) 5,000 X \$17 = \$85,000 \$304,000 Download free ebooks at bookboon.com 30 Inventory Costing Methods Current Assets: Part II 6.9 LIFO If Gonzales uses LIFO, ending inventory and cost of goods sold calculations are as follows, producing the financial statements at right: Beginning inventory 4,000 X \$12 = \$48,000 GONZALES CHEMICAL COMPANY I ncome Statement For the Year Ending December 31, 20XX Net purchases (\$232,000 total) 6,000 X \$16 = \$96,000 8,000 X \$17 = \$136,000 + = Cost of goods available for sale (\$280,000 total) 4,000 X \$12 = \$48,000 6,000 X \$16 = \$96,000 *** 8,000 X \$17 = \$136,000 REVENUES Net sales COST OF GOODS SOLD Beginning inventory, Jan. 1 Net purchases Goods available for sale Less: Ending inventory, Dec. 31 Cost of goods sold GROSS PROFIT Cost of goods sold (\$216,000 total) 8,000 X \$17 = \$136,000 5,000 X \$16 = \$80,000 + ASSETS ... Average unit cost (note: do not *** \$280,000 18,000 REVENUES Net sales COST OF GOODS SOLD Beginning inventory, Jan. 1 Net purchases Goods available for sale Less: Ending inventory, Dec. 31 Cost of goods sold GROSS PROFIT Cost of goods sold (13,000 units @ \$15.5555) \$304,000 \$ 48,000 232,000 \$280,000 77,778 ... \$15.5555 per Ending inventory (5,000 units @ 64,000 I nventory GONZALES CHEMICAL COMPANY I ncome Statement For the Year Ending December 31, 20XX If the company uses the weighted-average method, ending inventory and cost of goods sold calculations are as follows, producing the financial statements at right: Divided by units (4,000 + 6,000 + 216,000 \$ 88,000 GONZALES CHEMICAL COMPANY B alance Sheet December 31, 20XX 6.10 Weighted Average Cost of goods available fo...
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## This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.

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