Gross profit ratios:
(in millions) 2014 2013
76,392$ 72,217$
noted, if any. Is the company’s performance improving? What factors might have caused the change
in the gross profit ratio?
Net sales
Cost of sales
Gross profit
General Instructions
1. The following worksheet may be used to complete the exercise/problem.
P5-9A
A list of accounts for Lloyd Inc. at December 31, 2016, follows:
Accounts Receivable 56,359$
Advertising Expense 12,900
Capital Stock 50,000
Cash 22,340
Dividends 6,000
Required
1. Determine cost of goods sold for 2016.
Cost of goods sold for 2016:
Beginning inventory 6,400$
Net purchases 61,608$
2. Determine net income for 2016:
Net income for 2016:
Net sales 111,760$
Cost of goods sold (from Part 1)62,483
Gross profit 49,277$
Operating expenses:
3. Prepare a balance sheet dated December 31, 2016.
Assets
Cash 22,340$
Accounts receivable 56,359
Inventory 5,900
Total assets 84,599$
LLOYD INC.
BALANCE SHEET
AT DECEMBER 31, 2016
General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
P5-9
A list of accounts for Maple Inc. at 12/31/2016 follows:
Accounts Receivable 2,359$
Advertising Expense 4,510
Buildings and Equipment, Net 55,550
Capital Stock 50,000
Cash 590
Depreciation Expense 2,300
Required
1. Determine cost of goods sold for 2016.
Cost of goods sold for 2016:
Beginning inventory 6,400$
Net purchases 39,400$
2. Determine net income for 2016.
Net income for 2016:
Net sales 83,584$
Cost of goods sold (from Part 1)38,675
Gross profit 44,909$
Operating expenses:
Salaries 25,600$
3. Prepare a balance sheet dated December 31, 2016.
Assets
Current assets:
Cash 590$
Accounts receivable 2,359
Liabilities
Current liabilities:
Salaries payable 650$
Income tax payable 3,200
Total liabilities 3,850$
Stockholders’ Equity
MAPLE INC.
BALANCE SHEET
AT DECEMBER 31, 2016
General Instructions
1. The following worksheet may be used to complete the exercise/problem.
Selling and administrative expenses for the month were $16,200. Depreciation expense was $6,000.
P5-12A
Units Unit Cost
Inventory, November 1 300 27.00$
November 4, purchase 375 26.50
November 7, sale 450 63.00
November 13, purchase 330 26.00
FIFO method:
Ending inventory: Units Price Total Cost
Story Company’s inventory records for the month of November reveal the following:
1. (a) Calculate the cost of goods sold and ending inventory using the FIFO method.
Assume a periodic inventory system:
2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, and
dollars or numbers in the $ cells.
375 26.50 9,938
330 26.00 8,580
180 25.40 4,572
Total: 1,185 31,190$
LIFO method:
Ending inventory: Units Price Total Cost
1. (c) Calculate the cost of goods sold and ending inventory using the weighted average method.
Assume a periodic inventory system:
Weighted average method:
Units Price Total Cost
Beginning inventory 300 27.00$ 8,100$
Nov. 4 375 26.50 9,938
2. Calculate the gross profit and net income under each costing assumption.
1. (b) Calculate the cost of goods sold and ending inventory using the LIFO method.
Assume a periodic inventory system:
Gross profit and net income:
Weighted
FIFO LIFO Average
Sales 75,330$ 75,330$ 75,330$
Cost of goods sold 31,190 30,540 30,851
Gross profit 44,141$ 44,790$ 44,479$
3. Under which costing method will Story pay the least taxes? Explain your answer.
Story pays the least taxes under the first-in, first-out method, since it has the highest cost of goods sold.
General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
Selling and administrative expenses for the month were $10,800. Depreciation expense was $4,000.
3. The completed exercise/problem may be printed or e-mailed per direction from your instructor.
P5-12
Units Unit Cost
Inventory, November 1 200 18.00$
November 4, purchase 250 18.50
November 7, sale 300 42.00
Required
Units in beginning inventory 200
Units purchased 820
Units available 1,020
Oxendine Company‘s inventory records for the month of November reveal the following:
1. Determine units in ending inventory for use in parts (a), (b), and (c).
2. The blue cells are for data entry. Enter text in the T cells, formulas in the F cells, and
dollars or numbers in the $ cells.
Total: 790 14,663$
LIFO method:
Ending inventory: Units Price Total Cost
200 18.00$ 3,600$
Weighted average method:
Units Price Total Cost
Beginning inventory 200 18.00$ 3,600$
Nov. 4 250 18.50 4,625
Gross profit and net income:
Weighted
FIFO LIFO Average
Sales 33,480$ 33,480$ 33,480$
Cost of goods sold 14,663 14,918 14,772
inventory system:
1. (c) Calculate the cost of goods sold and ending inventory using the weighted average method.
Assume a periodic inventory system:
2. Calculate the gross profit and net income under each costing assumption.
1. (b) Calculate the cost of goods sold and ending inventory using the LIFO method. Assume a periodic
4. Assume that Oxendine prepares its financial statements in accordance with IFRS. Which costing
method should the company use to pay the least amount of taxes? Explain your answer.
If Oxendine Company prepares its financial statements in accordance with IFRS, then it is not allowed to use LIFO.
Under IFRS, LIFO cannot be used, so the weighted average method will result in larger cost of goods sold than with FIFO,
lower income, and consequently a lower income tax than with FIFO.
3. Under which costing method will Oxendine pay the least taxes? Explain your answer.
Oxendine pays the least taxes under the last-in, first-out method since it has the highest cost of goods sold.