Qp corp sold 6500 units of its product at 50 per unit in

Assignment Help Accounting Basics

Reference no: EM13597697

QP Corp. sold 6,500 units of its product at $50 per unit in year 2010 and incurred operating expenses of $5 per unit in selling the units. It began the year with 700 units in inventory and made successive purchases of its product as follows.

January 1	Beginning inventory	700 units @ $18 per unit
February 20	Purchase	1,600 units @ $19 per unit
May 16	Purchase	800 units @ $20 per unit
October 3	Purchase	500 units @ $21 per unit
December 11	Purchase	3,500 units @ $22 per unit

ASSIGNMENT:
1. Prepare comparative income statements for the three inventory costing methods of , LIFO, and weighted average. Include a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system , and its income tax rate is 30%. (Round per unit costs to three decimals, but inventory balances to the dollar.)

2. How would the financial results from using the three alternative inventory costing methods change if QP had been experiencing declining costs in its purchases of inventory?

3. What advantages and disadvantages are offered by using (a) LIFO and (b) FIFO? Assume the continuing of increasing costs.

These are my results but they do not add up!!

	FIFO	LIFO	Weighted Average
Sales	325,000	325,000	325,000
Inventory December 31, 2009	12,600	12,600	12,600
Cost of purchases	133,900	133,900	133,900
Cost of goods available for sale	146,500	146,500	146,500
Inventory December 31, 2010	79,100	59,000	52,800
Cost of goods sold	67,400	87,500	97,700
Gross profit	257,600	237,500	231,300
Expenses	32,500	32,500	32,500
Income before Taxes	225,100	205,000	198,800
Income Tax Expense	67,530	61,500	59,640
Net Income	111,440	109,760	110,866

Supporting Calculations.

Reference no: EM13597697

Questions Cloud

What is the appropriate accounting treatment for the value : what is the appropriate accounting treatment for the value assigned to in-process research and development acquired in

Assume that sufficient constraint time is available to : assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. up to

Great lakes health care common stock offers an expected : great lakes health care common stock offers an expected total return of 9.2. the last annual dividend wwas 2.10 a

Steve owns machine a adjusted basis of 12000 and fair : steve owns machine a adjusted basis of 12000 and fair market value of 15000 which he useds in his business. steve

Qp corp sold 6500 units of its product at 50 per unit in : qp corp. sold 6500 units of its product at 50 per unit in year 2010 and incurred operating expenses of 5 per unit in

Randell company issues 7 10-year bonds with a par value of : randell company issues 7 10-year bonds with a par value of 150000 and semiannual interest payments. on the issue date

Northern alliance company needs to raise 27 million to : northern alliance company needs to raise 27 million to start a new project and will raise the money by selling new

Lu villena an employee of etraincom leases a car at ohare : lu villena an employee of etrain.com leases a car at ohare airport for a three-day business trip. the rental cost is

Tri state pickle company preferred stock pays a perpetual : tri state pickle company preferred stock pays a perpetual annual dividend of 2 12 of its par value. par value of tsp

User Account

All Pages