Analyze the major pros and cons of a single-step income statement and a multistep income statement.

1.Kingbird, Inc. took a physical inventory on December 31 and determined that goods costing $230,000 were on hand. Not included in the physical count were $31,000 of goods purchased from Blue Spruce Corp., FOB, shipping point, and $20,500 of goods sold to Blossom Company for $30,000, FOB destination. Both the Blue Spruce purchase and the Blossom sale were in transit at year-end. What amount should Kingbird report as its December 31 inventory?

Ending Inventory

  1. In its first month of operations, Sheridan Company made three purchases of merchandise in the following sequence: (1) 240 units at $3, (2) 340 units at $5, and (3) 440 units at $6. Assuming there are 140 units on hand at the end of the period, compute the cost of the ending inventory under (a) the FIFO method and (b) the LIFO method. Sheridan Company uses a periodic inventory system.

FIFO

LIFO

The Ending Inventory

$Enter a dollar amount

$Enter a dollar amount

  1. The Blue Spruce Company has just completed a physical inventory count at year end, December 31, 2022. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $ 77,300. During the audit, the independent CPA discovered the following additional information:

(a)

There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $ 9,900. Because the goods had not arrived, they were excluded from the physical inventory count.

(b)

On December 27, 2022, a regular customer purchased goods for cash amounting to $ 1,150 and had them shipped to a bonded warehouse for temporary storage on December 28, 2022. The goods were shipped via common carrier with terms FOB shipping point. The customer picked the goods up from the warehouse on January 4, 2023. Blue Spruce Company had paid $ 575 for the goods and, because they were in storage, Blue Spruce included them in the physical inventory count.

(c)

Blue Spruce Company, on the date of the inventory, received notice from a supplier that goods ordered earlier, at a cost of $ 3,300, had been delivered to the transportation company on December 28, 2022; the terms were FOB shipping point. Because the shipment had not arrived on December 31, 2022, it was excluded from the physical inventory.

(d)

On December 31, 2022, there were goods in transit to customers, with terms FOB shipping point, amounting to $ 850 (expected delivery on January 8, 2023). Because the goods had been shipped, they were excluded from the physical inventory count.

(e)

On December 31, 2022, Blue Spruce Company shipped $ 2,900 worth of goods to a customer, FOB destination. The goods arrived on January 5, 2023. Because the goods were not on hand, they were not included in the physical inventory count.

(f)

Blue Spruce Company, as the consignee, had goods on consignment that cost $ 2,900. Because these goods were on hand as of December 31, 2022, they were included in the physical inventory count.

Analyze the above information and calculate a corrected amount for the ending inventory.

Corrected inventory

$ enter corrected inventory in dollars

  1. Novak has the following inventory data:

Nov. 1

Inventory

37 units @ $ 7.30 each

8

Purchase

146 units @ $ 7.85 each

17

Purchase

73 units @ $ 7.70 each

25

Purchase

110 units @ $ 8.10 each

A physical count of merchandise inventory on November 30 reveals that there are 122 units on hand. Ending inventory under FIFO is

$ 1932.

$ 1886.

$ 983.

$ 937.

  1. Concords has the following inventory data:

Nov. 1

Inventory

24 units @ $ 4.80 each

8

Purchase

96 units @ $ 5.15 each

17

Purchase

48 units @ $ 5.05 each

25

Purchase

72 units @ $ 5.30 each

A physical count of merchandise inventory on November 30 reveals that there are 80 units on hand. Cost of goods sold under LIFO is

$ 830.

$ 812.

$ 422.

$ 404.

  1. Kingbird has the following inventory data:

Nov. 1

Inventory

34 units @ $ 6.80 each

8

Purchase

137 units @ $ 7.35 each

17

Purchase

68 units @ $ 7.20 each

25

Purchase

103 units @ $ 7.50 each

A physical count of merchandise inventory on November 30 reveals that there are 114 units on hand. Assuming that the specific identification method is used and that ending inventory consists of 34 units from each of the three purchases and 12 units from the November 1 inventory, cost of goods sold is

$ 1669.

$ 1637.

$ 1664.

$ 1023.

  1. Novak Corp. had the following inventory transactions occur during 2022:

Units

Cost/unit

Feb. 1, 2022

Purchase

132

$ 55

Mar. 14, 2022

Purchase

227

$ 57

May 1, 2022

Purchase

161

$ 60

The company sold 373 units at $ 77 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using LIFO?

$ 21744

$ 21039

$ 6977

$ 7682

  1. Blue Spruce Corp. had the following inventory transactions occur during 2022:

Units

Cost/unit

Feb. 1, 2022

Purchase

104

$ 104

Mar. 14, 2022

Purchase

180

$ 109

May 1, 2022

Purchase

128

$ 114

The company sold 296 units at $ 146 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using FIFO?

$ 31804

$ 10312

$ 32904

$ 11412

  1. Blue Spruce Corp. had beginning inventory of $ 17400 at March 1, 2022. During the month, the company made purchases of $ 75400. The inventory at the end of the month is $ 20070. What is cost of goods sold for the month of March?

$ 92800

$ 72730

$ 75400

$ 95470

  1. Swifty Corporation has the following inventory data:

July 1

Beginning inventory

12 units at $ 19

$ 228

7

Purchases

42 units at $ 20

840

22

Purchases

6 units at $ 22

132

$ 1200

A physical count of merchandise inventory on July 30 reveals that there are 20 units on hand. Using the average cost method, the value of ending inventory is

$ 412.

$ 388.

$ 407.

$ 400.

  1. Windsor, Inc. has the following inventory data:

July 1

Beginning inventory

26 units at $ 16

$ 416

7

Purchases

90 units at $ 17

1530

22

Purchases

13 units at $ 19

247

$ 2193

A physical count of merchandise inventory on July 30 reveals that there are 41 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is

$ 779.

$ 697.

$ 671.

$ 656.

  1. Pharoah Company has the following inventory data:

July 1

Beginning inventory

30 units at $ 23

$ 690

7

Purchases

169 units at $ 24

4056

22

Purchases

31 units at $ 22

682

$ 5428

A physical count of merchandise inventory on July 30 reveals that there are 71 units on hand. Using the average cost method, the value of ending inventory is

$ 1676.

$ 1704.

$ 1642.

$ 1562.

  1. Skysong, Inc. has the following inventory data:

July 1

Beginning Inventory

33 units at $ 16

$ 528

7

Purchases

115 units at $ 17

1955

22

Purchases

16 units at $ 18

288

$ 2771

A physical count of merchandise inventory on July 30 reveals that there are 41 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

$ 2033.

$ 1976.

$ 2107.

$ 2058.

  1. Nash’s Trading Post, LLC uses a periodic inventory system. Details for the inventory account for the month of January 2022 are as follows:

Units

Per unit price

Total

Balance, 1/1/2022

220

$ 4.00

$ 880

Purchase, 1/15/2022

110

.. 3.90

429

Purchase, 1/28/2022

110

.. 4.10

451

An end of the month (1/31/2022) inventory showed that 180 units were on hand. If the company uses FIFO and sells the units for $ 7 each, what is the gross profit for the month?

$ 1260

$ 1820

$ 1036

$ 784

  1. Windsor, Inc. uses a periodic inventory system. Details for the inventory account for the month of January 2022 are as follows:

Units

Per unit price

Total

Balance, 1/1/2022

260

$ 4.00

$ 1040

Purchase, 1/15/2022

130

.. 4.60

598

Purchase, 1/28/2022

130

.. 4.70

611

An end of the month (1/31/2022) inventory showed that 210 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

$ 840

$ 930

$ 979

$ 1409

  1. Financial information is presented below:

Operating expenses

$ 25000

Sales revenue

193000

Cost of goods sold

157000

Gross profit would be

$ 36000.

$ 25000.

$ 11000.

$ 168000.

  1. Financial information is presented below:

Operating expenses

$ 49000

Sales revenue

208000

Cost of goods sold

157000

The gross profit rate would be

0.25.

0.75.

0.01.

0.24.

  1. Financial information is presented below:

Operating expenses

$ 30000

Sales returns and allowances

8000

Sales discounts

3000

Sales revenue

142000

Cost of goods sold

93000

Gross profit would be

$49000.

$38000.

$41000.

$46000.

  1. Financial information is presented below:

Operating expenses

$ 24000

Sales returns and allowances

6000

Sales discounts

4000

Sales revenue

154000

Cost of goods sold

92000

The gross profit rate would be

0.34.

0.40.

0.64.

0.36.

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