Balance sheet 24 illustration of lifofifo contd year

This preview shows page 32 - 40 out of 58 pages.

Balance sheet: 24
Illustration of LIFO/FIFO (cont'd) Year I (frrst year of operations) - continued: Summary: Beginning Inventory + Purchases FIFO: $0 + 59,000 LIFO: $0 + 59,000 FIFO Invento + LIFO Reserve 0 0 Purch. = COGS = 59 000 p r 000 33,oclo Which is greater? Income statement: Entry to adjust FIFO inventory to LIFO inventory at year-end: Cost of Goods Sold sll toÙo LIFO Reserue S ìl rooo LIFO Invento 0 Purch. = COGS = ôóo OR OR OR OR / V cocsuro? NET INCOMEuTo? INCOME TAX EXP.uro? INVENTORYTTTo? Ending Inventory = 33,ooo = åQ, ooo = 59 {Àooo Cost of Goods Sold $ )b,ooa 3Í,ooo $ COGSrrro NET INCOMETTTo INCOME TAX EXP.rrro INVENTORYTTTo J J ,l I l, ôoo ll , ooo Balance sheet: 24
25 Illustration of LIFO/FIFO (cont’d) Year 2 (inventory input costs decrease): Purchases of inventory: # of gallons x $ per unit = Total purchases 25,000 $4.00 $100,000 Sales of inventory in year 2 = 25,000 gallons FIFO LIFO Units x $/gal. = Total $ Units x $/gal. = Total $ Ending inventory: _____ _______ _____ _______ _____ _______ _____ _______ COGS: _____ _______ _____ _______ _____ _______ _____ _______
Illustration of LIFO/FIFO (cont'd) Year 2 (inventory inpui costs decrease): Purchases of inventory: # of gallons x $ per unit = Total purchases 25,000 $4.00 $ 100,000 Sales of inventory in year 2 = 25,000 gallons FIFO Ending inventory: x $/gal. = srJ Un¡ts 1,ooô Total $ tur*_ Srooo âÇtosÔ '/9rooo LIFO Units x $/gal. = Total $ coGs êLgtoo I 5,ooo lg,oôo s+ s$ Å+ 25
Illustration of LIFO/FIFO (cont'd) Year 2 (inventory input costs decrease): Purchases of inventory: # of gallons x $ per unit 25,000 $4.00 Sales of inventory ¡n year 2 = 25,000 gallons Units x $/gal. Ending inventory: COGS Units x ß )a, ooo â5,ooi, 34 Jtó0 þðo Total purchases $100,000 FO LI FO FI Total $ 6¡0oo f,ooO $/gal. = Total $ { 3 tt,ooo s ( 4,ooo 25
26 Illustration of LIFO/FIFO (cont’d) Year 2 (continued): Summary: Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold FIFO: $ ________ + _______ - _________ = $ ________ LIFO: $ ________ + _______ - _________ = $ ________ FIFO Inventory + LIFO Reserve = LIFO Inventory Purch. = COGS = Purch. = COGS = Entry to adjust FIFO inventory to LIFO inventory at year-end: LIFO Reserve Cost of Goods Sold Which is greater? Income statement: COGS FIFO OR COGS LIFO ? NET INCOME FIFO OR NET INCOME LIFO ? INCOME TAX EXP. FIFO OR INCOME TAX EXP LIFO ? Balance sheet: INVENTORY FIFO OR INVENTORY LIFO ?
Illustration of LIFû/FIFO (contnd) Year 2 (continued.t' Summary: Beginning Inventory + Ending Inventory A8,ooA Ð),, oôo LIFO T Purch. = COGS = OR OR OR OR Cost of Goods Sold l0î,ooO 0t oaC Purchases FIFO: $ LIFO: $ ooO + ló0 000 åâ,ooo + 100, ¡ gg $ $ FIFO Invento + LIFO Reserve Purch COGS = Entry to adjust FIFO inventory to LIFO inventory at year-end: LIFO Reserve Cost of Goods Sold Which is greater? Income statement: COGSrrro NET INCOMETTTo ïNCOME TAX EXP.rrro INVENTORYTTTo COGSLTTo? NET INCOMEuTo? INCOME TAX EXPuro? INVENTORYLTTo? Balance sheet: 26
Illustration of LIFO/FIFO (cont'd) Year 2 (continued_t' Summary: Beginning Inventory + Purchases FIFO: $ + LIFO: $ + FIFO Invento + LIFO Reserue 3V,u:ö Purch. = Ending Inventory LIFO I Cost of Goods Sold $ $_ COGS = åâ,[email protected] Purch. = OR OR OR OR COGS = lo COGSuro? NET INCOMEuTo? INCOME TAX EXPuro? INVENTORYuTo? loo 000 IO 000 lôÕ â6&û &9,ooo Entry to adjust FIFO inventory to LIFO inventory at year-end: , LIFO Reserve Cost of Goods Sold Which is greater?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture