Question

Booth Company employs a periodic inventory system and reported the following inventory information for the month of August: August 1 Beginning inventory 2,200 units @ $15 cost per unit August 6 Sold 1,300 units August 15 Purchased 1,700 units @ $25 cost per unit August 18 Sold 1,900 units August 23 Purchased 900 units @ $24 cost per unit August 26 Purchased 700 units @ $19 cost per unit August 29 Sold 2,000 units August 30 Purchased 1,500 units @ $37 cost per unit During August, Booth Company reported operating expenses of $23,000 and had an income tax rate of 37%. Using the weighted average method, Booth Company's gross profit for August totaled $70,460. Calculate the amount of net income reported on Booth Company's income statement for August using the LIFO method.

Answer 1

Net income= 41,806.8

Step-by-step explanation:

Giving the following information:

The following inventory information for August:

August 1 Beginning inventory 2,200 units at $15 cost per unit

August 6 Sold 1,300 units

August 15 Purchased 1,700 units at $25 cost per unit

August 18 Sold 1,900 units

August 23 Purchased 900 units at $24 cost per unit

August 26 Purchased 700 units at $19 cost per unit

August 29 Sold 2,000 units

August 30 Purchased 1,500 units at $37 cost per unit

During August, Booth Company reported operating expenses of $23,000 and had an income tax rate of 37%

First, we need to calculate the revenues for August.

Weighted-average cost= (15 + 25 + 24 + 19 + 37)/5= $24

Units sold= 5,200 units

COGS= 5,200*24= 124,800

Revenues= gross profit + cost of goods sold= 70,460 + 124,800= 195,260

Cost, LIFO method:

COGS= 700*19 + 900*24 + 1700*25 + 1900*15= 105,900

Income statement:

Revenues= 195,260

COGS= 105,900 (-)

Gross profit= 89,360

Operating expenses= 23,000 (-)

EBIT= 66,360

Tax= 24,553.2 (-)

Net income= 41,806.8