5) During the month of December, Brooklyn Bicycles reported the following invent

Question

5) During the month of December, Brooklyn Bicycles reported the following inventory transactions Units Cost Purchase Purchase Sold Purchase Sold 35 S 120.00 55 $125.00 47)S 225.00 76 140.00 (98) S 298.00 During the period, Brooklyn incurred S8,500 in additional operating expenses. Note: Brooklyn uses a periodi inventory system, has an incomie tax rate of 30% and had no beginning inventory. (8 points) Required: a. Prepare a multi-step income statement for Brooklyn, assuming that it uses the LIFO inventory valuation and a periodic system. b. Determine the ending inventory balance that would appear on Brooklyn's balance shee at the end of December. SHOW ALL YOUR WORK

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Purchasse Purchase-1 35 120 4200 14 120 1680 21 120 2520 Purchasse-2 55 125 6875 55 125 6875 Purchasse-3 76 140 10640 76 140 10640 TOTAL 166 21715 145 19195 21 120 2520 Req A: Income Statement Sales revenue (47 units @ 225 and 98 units @ 298) 39779 Less: Cost of goods sold 19195 Gross margin 20584 Less: Operating expenns 8500 Net income before taxx 12084 Less: tax @ 30% 3625 Net Income after tax 8459 Req B: Ending Inventory to be shown in balance Sheet is $ 2520

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