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.

 

 

 

 

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