1 Alpha Company uses the periodic inventory system and had t

1. Alpha Company uses the periodic inventory system and had the following inventory & sales activity for the month of May 2016:

Date

Activity

Quantity

Unit Price

5/1

Beginning Inventory

175

$10

5/5

Purchase

200

$12

5/15

Purchase

300

$15

5/25

Purchase

150

$16

Sales were 525 units at $20.  Using the LIFO method, determine the dollar values following for the month of May:

1. Ending Inventory

2. Cost of Goods Available for Sale

3. Cost of Goods Sold

2. The following is a partial Adjusted Trial Balance for Alpha Company for the month:

Alpha Company

Adjusted Trial Balance (partial)

January 31, 2016

Accounts

Debit

Credit

Inventory

$2,750

Sales

$10,000

Sales Discounts

200

Sales Returns & Allowances

1,200

Purchases

4,000

Purchases Discounts

150

Purchase Returns & Allowances

450

Freight In

50

Advertising Expense

150

Depreciation Expense (100% Admin & General)

130

Freight Out

70

Income Tax Expense

500

Salaries Expense

550

Utilities Expense

100

Additionally, Inventory for December 31, 2015 was $2,500. Prepare a multiple-step income statement.

What amount should Alpha Company report on a Multi-Step Income Statement for the following items:

1. Net Sales

2. Cost of Goods Available for Sales

3. Gross Profit

4. General & Administrative Expenses

5. Income before Taxes

3. On May 15, 2016 the Smoky Bear Company inventory storage facility was completely destroyed in a fire. Offsite accounting records reflect the normal gross profit rate is 40% of sales. Sales to the date of the fire were $1,650,000. The April 30, 2016 inventory value was $500,000. Two purchases were made during May, before the fire, for the values of $500,000 and $800,000. Using the Gross Profit Method determine the estimated inventory loss due to the fire.

4. The following are selected account balances for Charlie Company\'s operations for the FY ended December 31, 2016. (All balances are normal):

Accounts

Amount

Net Sales

$100,500

Administrative Expenses

22,000

Selling Expenses

12,000

Cost of Goods Sold

46,000

Interest Expense

2,000

Income Tax Expense

1,000

Prepaid Expenses

$5,000

Interest Receivable

$1,000

What is the Net Profit on Sales ratio for the year 2016? (Enter the value as a percentage rounded to one decimal place. Example, 0.105134 would be entered as 10.5%)

4. The following are selected account balances for Charlie Company\'s operations for the FY ended December 31, 2016. (All balances are normal):

Accounts

Amount

Net Sales

$100,500

Administrative Expenses

22,000

Selling Expenses

12,000

Cost of Goods Sold

46,000

Interest Expense

2,000

Income Tax Expense

1,000

Prepaid Expenses

$5,000

Interest Receivable

$1,000

What is the Gross Profit Margin ratio for the year 2016? (Enter the value as a percentage rounded to one decimal place. Example, 0.105134 would be entered as 10.5%)

6. Alpha Company has the following account balances information for fiscal year 2015 & 2016 (all balances are normal):

Alpha Company

December 31

Accounts

2016

2015

Merchandise Inventory

$1,200,000

$800,000

Office Supplies

25,000

20,000

Sales

3,000,000

2,500,000

Cost of Goods Sold

2,000,000

1,600,000

Freight Out

15,000

10,000

What is the FY 2016 inventory turnover ratio? Enter the answer as a number rounded to one decimal place followed by a space and the word times. (Example 1.123 would be entered 1.1 times)

Date	Activity	Quantity	Unit Price
5/1	Beginning Inventory	175	$10
5/5	Purchase	200	$12
5/15	Purchase	300	$15
5/25	Purchase	150	$16

Solution

Answer to Question 1.

Cost of Goods available for Sale = Cost of Beginning Inventory + Cost of Purchases
Cost of Beginning Inventory = 175 * $10 = $1,750

Cost of Purchases = (200 * $12) + (300 * $15) + (150 * $16)
Cost of Purchases = $2,400 + $4,500 + $2,400
Cost of Purchases = $9,300

Cost of Goods available for Sale = $1,750 + $9,300
Cost of Goods available for Sale = $11,050

Cost of Goods Sold = (150 * $16) + (300 * $15) + (75 * $12)
Cost of Goods Sold = $2,400 + $4,500 + $900
Cost of Goods Sold = $7,800

Ending Inventory = Cost of Goods available for Sale – Cost of Goods Sold
Ending Inventory = $11,050 - $7,800
Ending Inventory = $3,250