Morrie Produce Began Operations on July 1 $$\text { Note 1: Marrie uses the periztic LIFO methut of inventury veluatizn. }$$

question 76

Essay

Morrie Produce began operations on July 1. Below is its income statement for the month of July and the current portion of its balance sheet dated July 31.
$\begin{array}{lr}\text { Sales revenue } & \$ 45,000 \\\text { Cost of goods sold (Note 1) } & \underline{ 12,000} \\\text { Gross profit } &33,000 \\\text { Operating expenses } & \underline{ 4,700}\\\text { Net income }& \underline{\$28,300}\\\\ \underline{\text { Current assets: }}\\\text { Cash } & \$ 8,000 \\\text { Accounts receivable } & 4,000 \\\text { Inventory } & \underline{1,200} \\\text { Total current assets } &\underline{ \$ 13,200}\\\underline{\text { Current liabilities: }}\\ \text { Accounts payable } & \$ 9,000 \\\text { Notes payable } &\underline{ 4.000 }\\\text { Total current liabilities }&\underline{ \$13,000}\end{array}$

$$\text { Note 1: Marrie uses the periztic LIFO methut of inventury veluatizn. }$$
$\begin{array}{ll}\text { July } 1 & \text { Purchased80 units@ } \$ 30 &\$2,400\\\text { July } 17 & \text { Purchased } 180 \text { units@ } \$ 60 &\underline{10,800}\\\text { Cost of goods available } &&13,200 \\\text { July } 31 \text { Inventory } & (40 @ \$ 30) &\underline{1,200}\\\text { Cost of goods sold } &&\underline{\$12,000}\end{array}$
Complete the following income statement and current portion of the balance sheet for Morrie for July using the FIFO cost flow assumption instead of LIFO.
Sales revenue . . . . . . . . . . . . . . . . . _____________________
Cost of goods sold . . . . . . . . . . . . . ._____________________
Gross profit . . . . . . . . . . . . . . . . . . . _____________________
Operating expenses. . . . . . . . . . . . . _____________________
Net income. . . . . . . . . . . . . . . . . . . . _____________________
Current assets:
Inventory. . . . . . . . . . . . . . . . . . ._____________________

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Definitions:

Operating Segments

Components of an enterprise that engage in business activities earning revenues and incurring expenses, whose operational results are regularly reviewed by the entity's chief operating decision maker.

External Customers

Individuals or entities that purchase goods or services from a business but are not part of the organization itself.

Revenue Test

A criterion used to determine the recognition of revenue in accounting, which stipulates that revenue can be recognized when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably.

Profit or Loss Test

A method used to determine the effectiveness and efficiency of a business by comparing its profits or losses over a specific period.