This paper circulates around the core theme of Calculate cost of goods sold for 2011, 2012, and 2013. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years. together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
LIFO liquidation
Cansela Corporation uses a periodic inventory system and the LIFO
method to value its inventory. The company began 2011 with inventory of
4,500 units of its only product. The beginning inventory balance of
$64,000 consisted of the following layers:
|
2,000 units at $12 per unit
|
. $24,000
|
|
2,500 units at $16 per unit
|
40,000
|
|
$64,000
|
During the three years 2011’2013 the cost of inventory remained
constant at $18 per unit. Unit purchases and sales during these years
were as follows:
|
Purchases
|
Sales
|
|
2011
|
10,000
|
11,000
|
|
2012
|
13,000
|
14,500
|
|
2013
|
12,000
|
13,000
|
Required:
1. Calculate cost of goods sold for 2011, 2012, and 2013.
2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years.
3. Prepare the company’s LIFO liquidation disclosure note that would
be included in the 2013 financial statements to report the effects of
any liquidation on cost of goods sold and net income. Assume any
liquidation effects are material and that Cansela’s effective income tax
rate is 40%. Cansela’s 2013 financial statements include income
statements for two prior years for comparative purposes.
