Question :
10) Spring Hill, Inc. sells merchandise to customers worldwide in : 1253248
10) Spring Hill, Inc. sells merchandise to customers worldwide in a highly competitive industry. During June, Spring Hill completed the following transactions:
? June 1: Purchased 200 units of merchandise for $11 each, FOB shipping point.
? June 1: Paid $205 of freight costs for the merchandise.
? June 3: Paid $1,200 to the local radio station for an advertising campaign related to the merchandise.
? June 9: Sold 180 units of the merchandise to customers for $26 each.
Required:
1. Determine the cost of the inventory on the books of Spring Hill, Inc., on June 2.
2. When will the costs that are included in inventory become expenses?
3. Which financial statement will report the costs that do NOT attach to inventory?
11) Umatilla Tile Company compiled the following inventory information for the current year. Sales for the year were 3,500 units at $25 each. Total operating expenses for the year, excluding cost of goods sold, were $35,000. The company maintains a periodic inventory system.
Date
Number of Units
Unit Cost
Total Cost
January 1
Beginning inventory
1,000
$10.08
$10,080
March 10
Purchase
1,200
$11.00
$13,200
July 22
Purchase
1,500
$12.00
$18,000
November 9
Purchase
1,800
$13.00
$23,400
Totals
5,500
$64,680
Required:
1. Determine the ending inventory cost assuming the company uses the weighted average inventory method.
2. Determine the net income that will be reported on the income statement assuming the company uses the weighted average inventory method.
12) Inventory data for Henderson Enterprises are below. Twenty units were sold during the period.
Date
Number of Units
Unit Cost
Total Cost
January
Beginning inventory
10
$10.00
$100
February
Purchase
12
$11.00
$132
March
Purchase
15
$12.00
$180
Total
37
$412
Required: Fill in the missing amounts for (A), (B), and (C) in the income statement below. Use the inventory method that will give the highest possible net income.
Henderson Enterprises
Income Statement
For the Quarter Ended March 31, 2011
Sales$9,000
Cost of goods sold(A)_________
Gross profit(B)_________
Expenses
Utilities$ 700
Salaries2500
Depreciation500
Total expenses3,700
Net income(C)_________
13) Inventory data for Patterson Enterprises are below. Two hundred units were sold during the quarter.
Date
Number of Units
Unit Cost
Total Cost
January
Beginning inventory
100
$100.00
$10,000
February
Purchases
120
$105.00
$12,600
March
Purchases
150
$112.00
$16,800
Required: Fill in the missing amounts for (A), (B), and (C) in the income statement below. Use the inventory method that will give the lowest possible federal income taxes.
Patterson Enterprises
Income Statement
For the Quarter Ended March 31, 2011
Sales$80,000
Cost of goods sold(A)_________
Gross profit(B)_________
Operating expenses
Utilities$12,000
Salaries25,000
Depreciation10,000
Total expenses47,000
Net income(C)_________
14) Ana, the accountant, is reviewing the work of a subordinate. Ana’s boss tells her to find as many errors as she can or, if there are no errors, certify that the work is done correctly. All information given relates to the month of January, 2011.
EMX Electronics
Income Statement
January 31, 2011
Revenues
Sales$60,000
Unearned revenues15,000
Accounts receivable20,000
Total revenues$95,000
Cost of goods sold40,000
Gross profit55,000
Expenses
Utilities$2,000
Salaries13,000
Dividends5,000
Depreciation1,000
Total expenses$48,000
Return on equity$3,000
Additional Information:
a. The beginning inventory was 200 units, at cost of $200 each. Purchases on January 3 were 100 units at a cost of $202 each and purchases on January 30 were 100 units at a cost of $205 each.
b. The company sold 150 units during the month for $400 each.
c. The company uses the weighted average cost flow method and a periodic inventory system.
Required: Prepare a corrected income statement for the month.
