Need Help with this please be very specific in what you are doing. I\'m lost try

Question

Need Help with this please be very specific in what you are doing. I'm lost trying to figure out what number to use.

PB7-2 Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market [LO 7-4]

Mondetta Clothing prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply LCM to the ending inventory. The preliminary income statement follows:

324,000

   Assume that you have been asked to restate the financial statements to incorporate LCM. You have developed the following data relating to the ending inventory:

Acquisition Cost

Mondetta Clothing prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply LCM to the ending inventory. The preliminary income statement follows:

value: 25.00 points PB7-2 Evaluating the Income Statement and Income Tax Effects of Lower of Cost or Market [LO 7-4] Mondelta Clothing prepared its annual financial statements dated December 31. The company used the FIFO Inventory costing method, but it failed to apply LCM to the ending inventory. The preliminary income statement follows: S428,000 Net Sales Cost of Goods Sold Beginning Inventory Purchases $ 47,000 277,000 Goods Available for Sale Ending Inventory (FIFO cost) 324,000 80,240 Cost of Goods Sold 243,760 Gross Profit Operating Expenses 184,240 95,000 Income from Operations Income Tax Expense (30%) 89,240 26,772 Net Income S 62,468 Assume that you have been asked to restate the financial statements to incorporate LCM. You have developed the following data relating to the ending inventory Item Quantity 3,400 1,700 7,400 3,400 B C D Market Value per Unit S6 40 3.40 Acquisition Cost Per Unit Total $4 90 $ 16.660 6.80 11,560 3.40 25,160 7.90 26,860 6.40 4.90 $ 80,240

Explanation / Answer

Answer:

Using data related to ending inventory

So, $64,260 is actually the number to use for Ending Inventory in the Income statement.

Reinstating the income statement.

Income statement (LCM)

For the Year Ended December 31

Item Quantity Acquisition cost per unit Acquisition cost Market value per unit Market value Lower of cost or market A 3,400 $4.90 $16,660 $6.40 $21,760 $16,660 B 1,700 6.80 11,560 3.40 5,780 5,780 C 7,400 3.40 25,160 6.40 47,360 25,160 D 3,400 7.90 26,860 4.90 16,660 16,660 64,260

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.