Reference no: EM13962299

Elizabeth Egbert owns a galvanizing plant.  Customers bring in their fabricated steel products (like light poles, towers, trailers, etc.), and Egbert dips them into a heated vat of molten zinc.  The zinc bonds to the metal and produces a highly durable corrosion resistant product.

Egbert's primary inventory is molten zinc purchased from suppliers in large blocks of solid material.  These blocks are immersed in the heated vat and will melt together with the zinc already in the pool.  Egbert generally keeps the vat relatively full, and it is never allowed to cool.

Egbert started the year 20X8 with 500,000 pounds of zinc in the pool.  During the year Egbert purchased 2,800,000 pounds of zinc.  At year's end, the pool contained 520,000 pounds of zinc.

(a) How much zinc was used during 20X8?

(b) Accountants frequently refer to "goods available for sale."  Is this concept the same as ending inventory?  How much zinc, in pounds, was "available for sale?"

(c) If the beginning inventory cost $1.25 per pound, and purchases during 20X8 cost $1.50 per pound, how much is the "cost of goods available for sale"?

(d) In preparing financial statements for 20X8, to what financial statement elements will the amount you calculated in part (c) be allocated?

(e) If Egbert uses FIFO, how much should be attributed to ending inventory and how much to cost of goods sold?

(f) If Egbert uses LIFO, how much should be attributed to ending inventory and how much to cost of goods sold?

(g) What will be the difference in profitability between choosing the FIFO and LIFO methods?  Does is seem reasonable the choice of accounting method can change the reported profit?

Partial information follows about net sales, net purchases, cost of goods sold, gross profit, total expenses, and net income for Slabaugh Company. Compute the missing values.

                                                      NET SALES    

   Sales                                            $ 800,000  

   Sales discounts                             20,000  

   Sales returns and allowances          45,000  

   Net sales                                      735,000  

 NET PURCHASES    

   Purchases                                     $ 400,000  

   Freight-in                                      20,000  

   Purchase discounts                        4,000  

   Purchase returns and allowances     2,500  

   Net purchases                               413,500  

 COST OF GOODS SOLD    

   Beginning inventory                       $ 85,400  

   Ending inventory                           74,500  

   Cost of goods sold                        424,400  

 GROSS PROFIT    

   Gross profit                                  310,600  

 TOTAL EXPENSES    

   Rent                                            $ 36,000  

   Salaries                                        145,700  

   Utilities                                         12,300  

   Freight-out                                   24,100  

   Other                                           24,100  

   Total expenses                              242,200  

 NET INCOME    

   Net income                                    68,400  

Dine-Corp International publishes ratings and reviews of the world's finest restaurants.  Following are facts you need to prepare Dine-Corp's March bank reconciliation:

Balance per company records at end of month       $ 72,644.12  

Bank service charge for the month                        44.00  

NSF check returned with bank statement               1,440.66  

Note collected by the bank during the month         45,000.00  

Outstanding checks at month end                        31,553.57  

Interest on note collected during the month          4,500.00  

Balance per bank at end of month                        144,223.99  

Deposit in transit at month end                           7,989.04