Problem 8-9 (Algo) LIFO liquidation (LO8-4, 8-6] Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company's records under this system reveal the following inventory layers at the beginning of 2021 (listed in chronological order of acquisition: 20,000 units @ $20 25,000 units @ $25 Beginning inventory $ 400,000 625,000 $1,025,000 During 2021, 50,000 units were purchased for $30 per unit. Due to unexpected demand for the company's product, 2021 sales totaled 61,000 units at various prices, leaving 34,000 units in ending inventory. Required: 1. Calculate the amount to report for cost of goods sold for 2021. 2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2021 financial statements. Assume an income tax rate of 25%. 3. If the company decided to purchase an additional 11,000 units at $30 per unit at the end of the year, how much income tax currently payable would be saved? 1. Cost of goods sold 2. LIFO liquidation profit 3. Income tax payable

Problem 8-9 (Algo) LIFO liquidation (LO8-4, 8-6] Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company's records under this system reveal the following inventory layers at the beginning of 2021 (listed in chronological order of acquisition: 20,000 units @ $20 25,000 units @ $25 Beginning inventory $ 400,000 625,000 $1,025,000 During 2021, 50,000 units were purchased for $30 per unit. Due to unexpected demand for the company's product, 2021 sales totaled 61,000 units at various prices, leaving 34,000 units in ending inventory. Required: 1. Calculate the amount to report for cost of goods sold for 2021. 2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2021 financial statements. Assume an income tax rate of 25%. 3. If the company decided to purchase an additional 11,000 units at $30 per unit at the end of the year, how much income tax currently payable would be saved? 1. Cost of goods sold 2. LIFO liquidation profit 3. Income tax payable

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 2E: Inventory Write-Down Stiles Corporation uses the FIFO cost flow assumption and is in the process of...

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Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the direct method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
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