Sheffield Inc. reported the following partial statement of income data for the years ended December 31, 2024 and 2023:SalesCost of goods soldGross profit(a)The company reported inventory in the statement of financial position at $46,000, $49,500, and $48,000 at the end of 2022, 2023,and 2024, respectively. The ending inventory amounts for 2022 and 2024 are correct. However, the company has understated theending inventory at December 31, 2023, by $7,620.Sales2024$263,000Cost of goods sold204,000$59,000Your answer has been saved. See score details after the due date.Prepare correct statements of income for 2023 and 2024 through to gross profit.2024Gross profit(b)2023$254,000199,390$54,610$eTextbook and Media26300021162051380$$2023Cumulative effect of the inventory error on total gross profit $25400019177062230Attempts: 1 of 1 usedWhat is the cumulative effect of the inventory error on total gross profit for these two years? (If answer is zero, please enter 0, donot leave any fields blank.)

The objective of this question is to determine the cumulative effect of an inventory error on the…

Answered: Sheffield Inc. reported the following…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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Use the following information relating to Clover Company to calculate the inventory turnover ratio, gross margin, and the number of days sales in inventory ratio, for years 2022 and 2023.
Use the following information relating to Medinas Company to calculate the inventory turnover ratio, gross margin, and the number of days sales in inventory ratio, for years 2022 and 2023.
Fava Company began operations in 2018 and used the LIFO inventory method for both financial reporting and income taxes. At the beginning of 2019, the anticipated cost trends in the industry had changed, so that it adopted the FIFO method for both financial reporting and income taxes. Fava reported revenues of 300,000 and 270,000 in 2019 and 2018, respectively. Fava reported expenses (excluding income tax expense) of 125,000 and 120,000 in 2019 and 2018, which included cost of goods sold of 55,000 and 45,000, respectively. An analysis indicates that the FIFO cost of goods sold would have been lower by 8,000 in 2018. The tax rate is 21%. Fava has a simple capital structure with 15,000 shares of common stock outstanding during 2018 and 2019. It paid no dividends in either year. Required: 1. Prepare the journal entry to reflect the change. 2. At the end of 2019, prepare the comparative income statements for 2019 and 2018. Notes to the financial statements are not necessary. 3. At the end of 2019, prepare the comparative retained earnings statements for 2019 and 2018.
The following select account data is taken from the records of Reese Industries for 2019. A. Use the data provided to compute net sales for 2019. B. Prepare a simple income statement for the year ended December 31, 2019. C. Compute the gross margin for 2019. D. Prepare a multi-step income statement for the year ended December 31, 2019.
Tanke Company reported net income on the year-end financial statements of $850,200. However, errors in inventory were discovered after the reports were issued. If inventory was overstated by $21,000, how much net income did the company actually earn?
Assume your company uses the periodic inventory costing method, and the inventory count left out an entire warehouse of goods that were in stock at the end of the year, with a cost value of $222,000. How will this affect your net income in the current year? How will it affect next years net income?
The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 2019: a. Prepare the cost of merchandise sold section of the income statement for the year ended April 30, 2019, using the periodic inventory system. b. Determine the gross profit to be reported on the income statement for the year ended April 30, 2019. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventory system?
Company Elmira reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 32,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
The following data are from the income statements of Haskin Company. Year 2017 2016 Sales revenue $6,420,000 $6,420,000 Beginning inventory 940,000 860,000 Purchases 4,340,000 4,661,000 Ending inventory 1,020,000 940,000 Answer the following questions: Compute for each year (1) the inventory turnover and (2) the days in inventory? What conclusions concerning the management of the inventory can be drawn from these data?
The management of Swifty Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2022 if either the FIFO or the LIFO method had been used. For 2022, the accounting records show these data: Inventories Purchases and Sales Beginning (8,000 units) $32,000 Total net sales (185,000 units) $1,137,750 Ending (13,000 units) Total cost of goods purchased (190,000 units) 846,000 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 50,000 $4.20 $210,000 2 40,000 4.35 174,000 3 40,000 4.50 180,000 4 60,000 4.70 282,000 190,000 $846,000 Operating expenses were $130,000, and the company’s income tax rate is 40%. 1. Prepare comparative condensed income statements for 2022 under FIFO and LIFO.
The management of Blue Spruce Corp. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2022 if either the FIFO or the LIFO method had been used. For 2022, the accounting records show these data: Inventories Purchases and Sales Beginning ( 10,500 units) $ 21,000 Total net sales ( 270,000 units) $ 1,120,500 Ending ( 25,500 units) Total cost of goods purchased ( 285,000 units) 645,750 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 75,000 $ 2.05 $ 153,750 2 60,000 2.15 129,000 60,000 2.30 138,000 4 90,000 2.50 225,000 285,000 $ 645,750 Operating expenses were $ 130,000, and the company's income tax rate is 40%.

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