Question

Cortez Company has just completed a physical inventory count at year-end on December 31, 2023. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $300,000. During the audit, the independent CPA discovered the following additional information:

e) Cortez Company, the consignee, held goods on consignment for Poppy Company that cost $5,000. Because these goods were on hand as of December 31, 2023, they were included in the physical inventory.

Answer 1

The subject of this question is business, and it asks for the accounting profit of a firm based on its sales revenue and expenses.

Step-by-step explanation:

The subject of this question is business. The question asks for the accounting profit of a firm based on its sales revenue and expenses. To calculate the accounting profit, we need to subtract the expenses (labor, capital, and materials) from the sales revenue.

In this case, the firm's sales revenue was $1 million, labor expenses were $600,000, capital expenses were $150,000, and materials expenses were $200,000. To calculate the accounting profit, we subtract the total expenses from the sales revenue: accounting profit = sales revenue - (labor + capital + materials).

Therefore, the firm's accounting profit is $1 million - ($600,000 + $150,000 + $200,000) = $50,000.