Johnson Corporation began the year with inventory of 28,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following transactions occurred during the year:

A. Purchased 140,000 additional units at a cost of $10 per unit. Terms of the purchases were 1/10, n/30, and 100% of the purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f. o.b. shipping point and freight charges of $0.60 per unit were paid by Johnson.
B. 2,800 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.60 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received.
C. Sales for the year totaled 135,000 units at $17 per unit.
D. On December 28, Johnson purchased 6,800 additional units at $10 each.
E. The goods were shipped f. o.b. destination and arrived at Johnson’s warehouse on January 4 of the following year. 30,200 units were on hand at the end of the year.

Required: 1)Determine ending inventory and cost of goods sold at the end of the year. 2)Assuming that operating expenses other than those indicated in the above transactions amounted to $186,000, determine income before income taxes for the year. 3)For financial reporting purposes, the company uses LIFO (amounts based on a periodic inventory system). Record the year-end adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $18,600. 4)Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other than those indicated in the above transactions amounted to $186,000.

1)Determine ending inventory and cost of goods sold at the end of the year.

Ending Inventory is (30,200×$10.60) = $320,120

Cost of Goods Sold is ((28,000×$8)+(107000×$10.60)) = $ 1,358,200

2)Income before income taxes for the year.

Sales(135000×17)                                                    $2,295,000

Less Cost of Goods Sold                                        $ 1,358,200

Gross Profit                                                              $  963,800

Less Operating Expenses                                        $186,000

Net Income before Taxes                                        $750,800

3) Adjusting entry for the LIFO reserve

Beginning FIFO Reserve     $ 18,600

Add Realisation to LIFO       $22,400

Ending LIFO Reserve            $41,000

4) Income before income taxes for the year.

Sales(135000×17)                                                    $2,295,000

Less Cost of Goods Sold                                        $ 1,431,000

Gross Profit                                                              $  864,000

Less Operating Expenses                                        $186,000

Net Income before Taxes                                        $678,000

Explanation:

Part 1 and Part 2

FIFO assumes that Inventory bought in first is the first to be sold

Thus Cost of Goods Sold is ((28,000×$8)+(107000×$10.60)) = $ 1,358,200

And Closing inventory is (30,200×$10.60) = $320,120

Part 3 and Part 4

LIFO assumes that Inventory bought in last is the first to be sold

Thus Cost of Goods Sold is (135000×$10.60) = $ 1431000

And Closing inventory is (28,000×$0.66) + (2,200×$10.60) = $41800

answer; hazards;

(i know i'm late but the answer's "things about yourself" because you want to list things you're capable of, why you want to open up the business, the amount of money you're putting into it,etc.) i'm guessing you take online school small business, the answers to the quizzes are all over quizlet. just look up your question and type quizlet after it and it'll pop up.