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Various accounting Problems

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Example (Question 1):

Presented below (see attachment) is financial information for two different companies. Determine the missing amounts.

Solution Preview

All the answers are in the attached file.

Net Sales=Sales-Sales Returns
a=7000 90000-83000
d=100000 95000+5000

Gross Profit = Net Sales -Cost of Goods Sold
b=83000-56000=27000
e=95000-38000=57000

Net Income=Gross Profit - Operating Expenses
c=27000-15000=12000
f=38000-15000=23000

The financial information is as below

Amoruso Tamburri
Company Company

Sales 90000 100000
Sales Return 7000 5000
Net Sales 83000 95000
Cost of Good Sold 56000 57000
Gross Profit 27000 38000
Operating Expenses 15000 23000
Net Income 12000 15000

1. FIFO - In FIFO goods purchased earlier are sold first. The closing inventory will consist of
goods purchased last.
The ending inventory is 150 units and these would have been purchased on June 23
The ending inventory value is 1050

2. LIFO - In LIFO goods purchased last are sold first. The closing inventory will consist of
goods purchased earliest.
The ending inventory is 150 units and these would have been the opening inventory
The ending inventory value is 750

Cost of Goods Sold

1. FIFO
Opening Inventory 1000 Given
Purchases 5300 Addition of 2 purchases
Goods Available for Sale 6300 sum
Closing Inventory 1050 As calculated earlier

Cost of Goods Sold 5250 difference between C28 and C29

2. LIFO
Opening Inventory 1000
Purchases 5300
Goods Available for Sale 6300
Closing Inventory 750

Cost of Goods Sold 5550

b. FIFO gives higher ending inventory value. This is because the unit ...

Solution Summary

The solution has various accounting problems dealing with missing amounts, LIFO and FIFI calculation and preparation of Income Statement

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