29450 inventory 32800 total assets 62250 liabilities

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$29,450 Inventory32,800 Total assets$62,250 Liabilities & Shareholders' (SH) EquityShareholders’ EquityContributed capital12,000 Retained earnings55,050 $67,050 Nan's Toy ExtravaganzaStatement of Cash FlowsFor the year ended June 30, 2007Cash from operations:Cash collected from customers$64,400 Cash paid for inventory(49,950)Cash paid for operating expenses(8,500)Cash paid for taxes(3,500)Net Cash from operations$2,450 Increase in cash during the year2,450 Add beginning cash27,000 Cash balance at June 30$29,450 c. Income before Taxes$9,500 $8,000 $8,750 Net Income$5,700 $4,800 $5,250 Net income is higher for FIFO, and taxes are higher.Net income is lower for LIFO, and taxes are lower.Net income and taxes using weighted average cost are between those using FIFO and LIFO.Total Liabilities and SH EquityWhat is income before taxes and net income under each of the three cost flow assumptions?FIFO periodicLIFO periodicWeighted average cost periodicWhat observations can you make about net income (after taxes) from the analysis of the three methods?
d.1.2.3.Lower of Cost or Market$33,000 $32,050 $32,800 e. Inventory Turnover1.461.541.5Average days in inventory250237243.3Inventory turnover ratio = Cost of goods sold Average inventoryFIFO = 1.4646,400 [(30,000+33,500)/2]LIFO = 1.5447,900 [(30,000+32,050)/2]Average Cost = 1.5047,150 [30,000+32,800)/2]Average days in inventory = 365 days in a yearInventory turnover ratioFIFO = 250365 1.46 LIFO = 237365 1.54 Weighted Average Cost 365 1.50 At the end of the year, the current replacement cost is $33,000. Indicate at what amount the company's inventory will be reported using the lower-of-cost-or-market rule for each method.FIFO PeriodicLIFO PeriodicWeighted average Cost PeriodicFor each method, calculate the inventory turnover ratio and the average days in inventory for the fiscal year ended June 30, 2007. (Ignore part d.)FIFO PeriodicLIFO PeriodicWeighted Average Cost Periodic
Solution to Problem 6-5Ba.1.2.3.Ending Inventory$25,880 $22,080 $23,920 Cost of Goods Sold$24,720 $28,520 $26,680 INVENTORYNo. of unitsUnit costTotal costBeginning inventory11/ 52,000 $4.00 $8,000 Purchases11/164,000 $4.40 17,600 11/295,000 $5.00 25,000 Cost of goods available for sale11,000 $50,600 No. of units Sales priceSales11/121500$6.00 $9,000 11/234300$6.00 25,800 Units sold5,800 $34,800 1.FIFOUnit costTotal costUnit costTotal costFIFO2,000$4.00 $8,000 FIFO0$4.00 $- 3,800$4.40 16,720 200$4.40 880 5,000$5.00 25,000 5,800 $24,720 5,200$25,880 2.LIFOUnit costTotal costUnit costTotal costLIFO5,000$5.00 $25,000 LIFO2,000$4.00 $8,000 800$4.40 3,520 3,200$4.40 14,080 0$5.00 - 5,800 $28,520 5,200$22,080 Assume Party Heaven uses a periodic inventory system. Compute the cost of goods sold and ending inventory at November 30 using (1) FIFO, (2) LIFO and (3) Weighted average cost.FIFO PeriodicLIFO PeriodicWeighted Average Cost PeriodicTotal revenueNo. of units soldNo. of units remainingCost of goods sold Ending Inventory No. of units soldNo. of units remainingCost of goods sold Ending Inventory
3.Weighted average costWeighted average cost$4.60 = $50,600 / 11,000Cost of goods sold $26,680 = 5,800 x $4.60Ending Inventory $23,920 = 5,200 x $4.60b.Inventory turnover1.461.901.67Days sales in inventory20.5515.7917.96Inventory turnover ratio = Cost of goods sold Average inventoryFIFO = 1.4624,720 [(8,000+25,880)/2]LIFO = 1.9028,520 [(8,000+22,080)/2]Weighted average cost =26,680 [(8,000+23,920/2]Days in inventory =30(for 30 days)Inventory turnover ratioFIFO 20.55301.46LIFO15.79301.9Weighted average cost17.96301.67c.

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