The Following Information Is for Choi Company for 2016

question 25

Essay

The following information is for Choi Company for 2016:
Beginning inventory 120 units @$100
Units purchased 180 units @ $112
Choi sold 250 units for $190 each.
Required:
a)Calculate gross margin assuming Choi uses FIFO,LIFO,Weighted average.
b)Disregarding the effect of income taxes,what would be the dollar amount of difference in net income between FIFO and LIFO?
c)Calculate the 2016 cash flow from operating activities assuming that Choi uses LIFO,FIFO.Again,disregard the effect of income taxes.

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Definitions:

Income Tax Expense

The total amount of income tax a company is obligated to pay to the government, reported on its income statement.

Investing Activities

Financial actions that involve the purchase of long-term assets, securities, or other investments to generate future income or value.

Sale of Equipment

The process of disposing or selling a company's equipment assets, which may result in a gain or loss reflected in the income statement.

Direct Method

A method of presenting the cash flow statement where cash receipts and cash payments from operating activities are disclosed, offering a clearer understanding of cash flows.