Much in taxes would McKinley save by using the LIFO method versus Fl BY (Learning Objective 2: Determining ending inventory and cost of goods sold—FIFO vs. ) MusicBiz.net specializes in sound equipment. Because each inventory item is expensive, MusicBiz uses a perpetual inventory system. Company records indicate the follow- ing data for a line of speakers: Item, Quantity Unit Cost Sale Price June 1 Balance 5 $90 6 Purchase 2 95 8 Sale 3 $150 Sale 8 I Required 1. Determine the amounts that MusicBiz should report for cost of goods sold and ending inventory 2 ways: (pp. 319-320) a. FIFO b. LIFO 2. MusicBiz uses the FIFO method. Prepare MusicBiz’ income statement for the month ended June 30, 20X5, reporting gross profit. Operating expenses totaled $320, and the income tax rate was 40%. (pp. 320-324)tio ha ———— | (a) as fel Cae # sate =7-8 (Learning Objective 2: Part pe si (Let tue 2: Pata year deprecation) Assume hat on See a Se cae 2: ete pi cee Sotinat ese mal en et sd ema l 27 E0000 oe oat aoe CE cen wih a 60000 a ne fH CONE cg. 3 ere Hoc es Sa er 2H ang He MEMS “i536, ine Be Unease eden ae en comer wn we ee ‘nga rar Which method ¥ the lowest net Me re residual value. After pe buldng wil remain Us eat 3DY We Fou deprecaing he Pu erage over 10 7635 samen concessions ‘Sa rlags determines tat wa ly 2 moe Year RES ‘Six es ne concession stand for fo eraightine method: P 383-264) earning osetve REED 0 ar os om posal) On ana Lo reful for ca an plane fo S20 seas the plane wo emai Lan Elva of $5,000.09 Pee ue the hile Me 3 pe lew te plane for 4 Ye te dion January 1 20X8, or age depreciation Compute accumulated epecton on the alan Jamary 1, 20X8 (same 2 Compatere 31, 20X7) (P37) 2, poco te sale ofthe plans oP ansary 1. 2088. (0-280) ee counting for he et of a compan’ narra santo compa «dees land 8 SSS he ernTeaco ea ied S150 alo FP 58-389) rn aaher ot comp Xr Feo tbe une” 7-11 (Lear Mesources) chev! heen of 2084, 85 in zion bares of A fhe grou: (PP: eed do CEVTENTENS aera me the cos ym dee vn pa des A " eet ot a ete i 2 mang au a emir 31 epi a ewes rw ase ‘eal ayer tbe ES 3, an Devernbet 3Ts Sap.0 bain. REP si ao chen em Give your reat arcana, god POPS ov mi at Peps purchased sie eh sc lies ring ote © en aa av 12 (Le st eek food indus" ‘ Your Pro — fo— Ny | Py me) ) Jel "EL slinated ssefe hfe‘Suppose FedEx purchased equipment on January 1, 20X7, or 4,000. The expected ws fall ofthe equipment 10 yes o 100,000 units of production, and its sda vale i ‘$4,000, Under depreiton methods, the anual deprecation expense andthe balance of sccumuated depreiation athe end of 20X7 and 20X8 are as flows Required 1 deny the depreciation method used n cach instance, and show the equation and computation foreach, Round tthe ners dole) 2. Sarume continued we oth same mtd through year 208, Determine the an ‘preoaion expense aecumulted depreciation, an bok ave of th equipment for Ene though 20ND under each method, assuring 12:00 wns of production in 2089, Answers | Requirement 1 Mtoe Depeileo = $40,084,000 $4,00) ch yes, 40,0010 yee $400 abd Dein Bowe tae pig x2 e104 2-308 0x7: 020 x $4000 = 84800 axe: 020 x ($44000 $8017.09 af on ee ses $409 50.09 onan rt ty 140 3000 wis $1200 0 ai = 500 ox nxs. $040lo: Mebode BT 1b |p Boo 45 Ecco |$ 7046 | Depexp_—_pupexp | Acc dep | sera 1 Sboc_| s 15840 |Date Peptaiaben exp Acc dp ty Bi _| | OYeer 5 Yveoo et? | $ Deo Ne 542 £ 20x68 |_s Shoo _|5 bhoo |s 3 I04-9-\etoridaox YB00| shoo | § 32.Yoo.‘Assess Your Pr 4. Inventory casts are decreasing, Inventory cats ae dea, aml your company oad od e. Inventory crs te nein, adh Ty cn ee sh se ee fice ee stable for the indefinite future. (Give the reason for your choice of method. i: aoa 6-29 (Learniny (Learning Objective 2: Measuring the effect of « LIFO liquidation) Suppose Saks Fifth Avenue, the special pose Specialty retailer, had these records for ladies’ evening gowns ‘Beginning inventory (40 @ $1,000 Purchase February (20 @ $1,100) Purchase in je ($0 $1,200} nn Purchass n December (30 @ $1300 (Gonds ralelencantetie= ¢ ‘Assume sales of evening gowns totaled 120 units during 20X9 and that Saks uses the MFO method to account for inventory, The income tax rate is 40%, URequired 1 Compute Sk’ cost of gods sod fo evening grwnsin 2088 pp. 318,229 > Comput hat eos of gods sold would have een Sas ha ua cn cam crember=x 1,300 per sverige grand mvenioy the same 1 ee atthe beginning ofthe year, 40 uns (Challenge) 030 (Leaming objective 2: Evaluating «companys praia) 2 Man dsclared Fo egy Lets ee why 2 Mart reported thes gues 7 Mar ne statement of Income , ‘years Ended Deceiver 30, 20X7,20X6yand 20S Hnoxy 20K 2085 _20X4 sales, wg of Canoes. iat Ger expenses. I A Renuiced same Consider