# Problem 5-5b, problem 6-2b, problem 6-3b

PROBLEM 5-5B Prepare a correct detailed multiple-step income statement.  Assume a tax rate of 25%. WRIGHT COMPANYIncome StatementFor the Month Ended December 31, 2014Sales Revenues     Account title Amount     Account title Amount     Account title AmountNet Sales  Cost of goods sold  Gross profit Amount  Operating Expenses  Account title Amount  Account title Amount  Account title Amount  Account title Amount  Account title Amount  Account title Amount  Account title Amount  Total operating expenses AmountIncome from operations AmountOther revenues and gainsAccount title Amount  Other expenses and lossesAccount title Amount Amount (Total)Income before income taxes  Income tax expense  Net Income     P5-5BAn inexperienced accountant prepared this condensed income statement forWright Company, a retail firm that has been in business for a number of years.WRIGHT COMPANYIncome StatementFor the Year Ended December 31, 2014RevenuesNet sales \$952,000Other revenues 16,000968,000Cost of goods sold 548,000Gross profit 420,000Operating expensesSelling expenses 160,000Administrative expenses104,000264,000Net earnings \$156,000As an experienced, knowledgeable accountant, you review the statement and determinethe following facts.1. Net sales consist of sales \$972,000, less freight-out on merchandise sold \$20,000.2. Other revenues consist of sales discounts \$12,000 and interest revenue \$4,000.3. Selling expenses consist of salespersons’ salaries \$88,000; depreciation on equip-ment \$4,000; sales returns and allowances \$46,000; advertising \$12,000; and salescommissions \$10,000. All compensation should be recorded as Salaries and WagesExpense.                                                                                   4. Administrative expenses consist of office salaries \$54,000; dividends \$14,000; utili-ties \$13,000; interest expense \$3,000; and rent expense \$20,000, which includesprepayments totaling \$2,000 for the first month of 2015. The utilities representutilities paid. At December 31, utility expense of \$3,000 has been incurred but notpaid.      Problem 6-2B (a) Determine the Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost                                      Total       (b) Determine the ending inventory and cost of goods sold under each of the assumed cost flow methods.  Prove the accuracy of the cost of goods sold under FIFO and LIFO.FIFO (1) Ending Inventory (2) Cost of Goods SoldDate Units Unit Cost Total Cost Cost of goods available for sale Amount  Amount   Amount Less: ending inventory Amount  Amount   Amount    Total Amount Total Amount Cost of Goods Sold               Amount Proof of Cost of Goods Sold (FIFO)Date Units Unit Cost Total Cost  Amount   Amount  Amount   Amount  Amount   Amount  Amount   AmountTotal Amount Total Amount LIFO (1) Ending Inventory (2) Cost of Goods SoldDate Units Unit Cost Total Cost Cost of goods available for sale Amount  Amount   Amount Less: ending inventory Amount  Amount   Amount    Total Amount Total Amount Cost of Goods Sold               Amount Proof of Cost of Goods Sold (LIFO)Date Units Unit Cost Total Cost  Amount   Amount  Amount   Amount  Amount   Amount  Amount   AmountTotal Amount Total Amount AVERAGE COST (Round to the nearest decimal, i.e., \$1.01) (1) Ending Inventory (2) Cost of Goods Sold  Units Unit Cost Total Cost Cost of goods available for sale Amount  Amount   Amount Less: ending inventory AmountTotal Amount Total Amount Cost of Goods Sold               Amount    (c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? Enter your answer here      P6-2B Lifetime Distribution markets classic children’s books. At the beginning of June, Lifetime had in beginning inventory 1,200 books with a unit cost of \$3. During June, Life- time made the following purchases of books.June     3          4,000 @ \$3                 June 29            4,000 @ \$6June 18            7,500 @ \$5During June, 10,500 books were sold. Lifetime uses a periodic inventory system.Instructions(a)  Determine the cost of goods available for sale.(b)  Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.)(c)  Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? Problem 6-3B (a) Determine the Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost                                               Total       (b) Determine the ending inventory and the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO and average-cost).  Prove the accuracy of the cost of goods sold under each method. FIFO (1) Ending Inventory (2) Cost of Goods SoldDate Units Unit Cost Total Cost Cost of goods available for sale Amount  Amount   Amount Less: ending inventory Amount  Amount   Amount    Total Amount Total Amount Cost of Goods Sold               Amount Proof of Cost of Goods Sold (FIFO)Date Units Unit Cost Total Cost  Amount   Amount  Amount   Amount  Amount   Amount  Amount   AmountTotal Amount Total Amount LIFO (1) Ending Inventory (2) Cost of Goods SoldDate Units Unit Cost Total Cost Cost of goods available for sale Amount  Amount   Amount Less: ending inventory Amount  Amount   Amount    Total Amount Total Amount Cost of Goods Sold               Amount Proof of Cost of Goods Sold (LIFO)Date Units Unit Cost Total Cost  Amount   Amount  Amount   Amount  Amount   Amount  Amount   AmountTotal Amount Total Amount AVERAGE COST (Round to the nearest decimal, i.e., \$1.01) (1) Ending Inventory (2) Cost of Goods Sold  Units Unit Cost Total Cost Cost of goods available for sale Amount  Amount   Amount Less: ending inventory AmountTotal Amount Total Amount Cost of Goods Sold               Amount   (c) Which cost flow method results in the lowest inventory amount for the balance sheet? The lowest cost of goods sold for the income statement? Enter your answer here       P6-3B Smythe Company Inc. had a beginning inventory of 200 units of Product ERV at a cost of \$6 per unit. During the year, purchases were:Jan 24              800 units at \$7            Aug. 19   600 units at \$9Apr 12             400 units at \$8            Nov. 30   350 units at \$10 Smythe Company uses a periodic inventory system. Sales totaled 1,900 units. Instructions(a) Determine the cost of goods available for sale.(b) Determine the ending inventory and the cost of goods sold under each of the assumed costflow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods soldunder the FIFO and LIFO methods. (Round average unit cost to three decimal places.)(c)  Which cost flow method results in the lowest inventory amount for the balance sheet?The lowest cost of goods sold for the income statement?

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