Compute gross profit and ending inventory for the month

Reference no: EM131410929

Vinnie's House of Televisions has 75 identical 27-inch color monitors in stock on January 1, 2012. Vinnie maintains records of the serial number of each monitor to track its costs. Vinnie purchased the 75 monitors on December 5, 2011, for $450 each. He also purchased 50 on January 2, 2012, for $500 each and an additional 65 on January 15, 2012, for $600 each. Each monitor is priced to sell at $1,000. Vinnie sold 130 monitors during the month of January.

a. Compute gross profit and ending inventory for the month if the company adheres to each of the following:

(1) FIFO cost flow assumption

(2) Averaging cost flow assumption

(3) LIFO cost flow assumption

b. Assume that Vinnie uses the specific identification method to compute the cost of goods sold. Explain how Vinnie could manipulate the gross profit number. What are the highest and the lowest gross profit amounts Vinnie could report? What are some possible factors that could motivate Vinnie to report either the highest or the lowest net income amount?

Reference no: EM131410929

Questions Cloud

Write a three pages paper on market competitiveness : Write a three pages paper on Market Competitiveness. Compose a three-to-five page paper. Your paper should be written in a scholarly third-person tone; it should be in APA format.

What is the real difficulty in conducting a risk analysis : How could the value of employee volunteer programs be enhanced for a firm to better align these programs with strategic philanthropy goals?How much of pretax profits may businesses in the United States declare as tax-deductible contributions?What ty..

Explain why situational leadership theory is useful : In a four- to five-page paper (excluding the title and references pages), explain why situational leadership theory is useful and relevant in developing an effective leadership culture

What behaviors of the first nurse were unethical : What behaviors of the first nurse were unethical? What behaviors of the second nurse were ethical? How do theories of cutural care guide our decisions on how to provide ethical, competent care?

Compute gross profit and ending inventory for the month : What are the highest and the lowest gross profit amounts Vinnie could report? What are some possible factors that could motivate Vinnie to report either the highest or the lowest net income amount?

Identify the five forces of competition : Determine the company's resources, capabilities, and core competencies and analyze the company's value chain to determine where they can create value using the resources, capabilities, and core competencies discussed above.

Evaluate international nonprofit organizations that identify : MT6580- Evaluate international nonprofit and non-governmental organizations (NGO's) that identify, educate, and intervene in global health care. Analyze the impact of international issues on the United States healthcare system.

What are the benefits of communication : What are the benefits of communication: between levels (/retailer/OEM/warehouse/factory), within levels (logistics/planner) in the supply chain

How the resulting financial statements would be misstated : Ordered $50,000 of inventory on December 29, 2011. The goods were shipped on December 30, 2011, with the terms FOB shipping point. Dallas received the inventory on January 4, 2012.

User Account

All Pages