Question

The following information pertains to Mason Company for Year 2: $20 Beginning inventory Units purchased 90 units 280 units @ @ $25 Ending inventory consisted of 40 units. Mason sold 330 units at $50 each. All purchases and sales were made with cash. Operating expenses amounted to $4100. Required a. Compute the gross margin for Mason Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average. b. What is the amount of net income using FIFO, LIFO, and weighted average? (Ignore income tax considerations.) c. Determine the cash flow from operating activities, using each of the three cost flow assumptions listed in Requirement a. Ignore the effect of income taxes. Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the gross margin for Mason Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average. (Round "Cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.) FIFO LIFO Weighted Average Gross margin $ 16,500

Answer 1

1. FIFO -

FIFO Cost of Good Sold Unit Rate Amount Purchase Rate Sr. No. Unit Amount Unit 90 Balance Rate Amount $ 20.00 $ 1,800 $ 23.78 $ 8,800 Beg. Bal Unit Purchased 280 $ 25.00$ 7,000 370 90 Sold $ 20.00 $ 1,800 $ 25.00$ 6,000 40 $ 25.00 $ 1,000 240 280 $ 25 $ 7,000 330 $ 24 $ 7,800 40 $ 25 $ 1,000

2. LIFO -

LIFO Cost of Good Sold Unit Rate Amount Purchase Rate Sr. No. Unit Amount Unit Balance Rate Amount $ 20.00 $ 1,800 $ 23.78 $ 8,800 Beg. Bal Unit Purchased 90 280 $ 25.00$ 7,000 370 280 Sold $ 25.00$ 7,000 $ 20.00 $ 1,000 40 $ 20.00 $ 800 50 280 $ 25 $ 7,000 330 $ 24 $ 8,000 40 $ 20 $ 800

3. Weighted Average -

Weighted Average Cost of Good Sold Amount Unit Rate Amount Purchase Rate Sr. No. Unit Unit 90 Beg. Bal Unit Purchased Sold Balance Rate Amount $ 20.00 $ 1,800 $ 23.78 $ 8,800 $ 23.78$ 951 280 $ 25.00$ 7,000 370 330 $ 23.78 $ 7,849 40 280 $ 25.00 $ 7,000 330 $ 23.78 $ 7,849 40 $ 23.78 $ 951

4. Gross Margin -

Mason Company Weighted FIFO LIFO Average $ 16,500 $ 16,500 $ 16,500 $ (7,800) $ (8,000) $ (7,849) $ 8,700 $ 8,500 $ 8,651 Sales Revenue (-) Cost of Good Sold Gross Margin

5. Net Income -

Sales Revenue (-) Cost of Good Sold Gross Margin Operating Expenses Mason Company Weighted FIFO LIFO Average $ 16,500 $ 16,500 $ 16,500 $ (7,800) $ (8,000) $ (7,849) $ 8,700 $ 8,500 $ 8,651 $ (4,100) $ (4,100) $ (4,100) Net Income $4,600 $ 4,400 $ 4,551

6. Cash Flow from Operating Activities -

LIFO Mason Company Weighted FIFO Average Cash Flow from Operating Activities Cash Flow from Customers $ 16,500 $ 16,500 $ 16,500 Cash Outflow for Inventory and Expense $(11,100) $(11,100) $ (11,100) Net Cash Flow from Operating Activities $5,400 $ 5,400 $ 5,400