Solution-What net income should Teal report

What net income should Teal report

Assignment Help Accounting Basics

Reference no: EM132448259

Question - Presented below are income statements prepared on a LIFO and FIFO basis for Teal Company, which started operations on January 1, 2016. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2017. The FIFO income statement is computed in accordance with the requirements of GAAP. Teal's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored.

	LIFO Basis		FIFO Basis
	2017	2016	2017	2016
Sales	$3,050	$3,050	$3,050	$3,050
Cost of goods sold	1,080	1,040	1,140	930
Operating expenses	1,040	1,040	1,040	1,040
Income before profit-sharing	930	970	870	1,080
Profit-sharing expense	93	97	98	97
Net income	$837	$873	$772	$983

Required -

1. If comparative income statements are prepared, what net income should Teal report in 2016 and 2017?

2. Assume that Teal has a beginning balance of retained earnings at January 1, 2017, of $873 using the LIFO method. The company declared and paid dividends of $480 in 2017. Prepare the retained earnings statement for 2017, assuming that Teal has switched to the FIFO method.

Reference no: EM132448259

Questions Cloud

Typical features of cnidarians : How are they characterized in terms of representative species, basic morphology, type of symmetry, germ layers and coelom, digestive

What does radial symmetry mean : What does radial symmetry mean? What type of symmetry is found in chordates? What other phyla of the animal kingdom contain species with radial symmetry?

Impact of killer whales on sea otter populations : Estes and his colleagues estimated the impact of killer whales on sea otter populations by comparing trends in population size and survival rates of individuall

Discuss between fee-for-service and capitation reimbursement : What is the main difference between the fee-for-service and capitation reimbursement methods? What are the advantages and disadvantages of each

What net income should Teal report : The company presently uses the LIFO method of pricing its inventory. If comparative income statements are prepared, what net income should Teal report in 2016

Explain how your choice for the supply of energy : Explain how your choice for the supply of energy (renewable/ non-renewable) affected the citizens of Sparksville. Highlight what you would change.

Explain two concepts in course wrap-up : Indicate how these two (2) new areas of knowledge will benefit you in your current job or future career / endeavors.Explain two concepts in Course Wrap-Up

Explain how recognition of depreciation is an illustration : Explain how the recognition of depreciation is an illustration of the accruals concept.Depreciation expense for the year.Net book value at the year end.

Name and describe the three ethical frameworks : What are the two rights that are the fundamental components of social Justice?Name and describe the three Ethical Frameworks.

User Account

All Pages

What net income should Teal report

Reference no: EM132448259

Reference no: EM132448259

Questions Cloud

Reviews

Write a Review

Accounting Basics Questions & Answers

How much control does fed have over this longer real rate

Coures:- fundamental accounting principles

Accounting problems

Theory of interest - term structure of interest rates

Write a report on internal controls

Prepare the bank reconciliation for company

Cost-benefit analysis

Theory of interest

Liquidity and profitability

What is the expected risk premium on the portfolio

Simple interest and compound interest

Capm and venture capital

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT