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johnson Corporation began 2018 with inventory of 12,000 units of its only product. The units cost $8 each. The company uses a periodic inventory...
johnson Corporation began 2018 with inventory of 12,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2018:
a. Purchased 60,000 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, 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. 1200 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 55,000 units at $16 per unit.
d. On December 28, 2018, Johnson purchased 5200 additional units at $11 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2019.
e. 15800 units were on hand at the end of 2018
Required:
1. Complete the below table to determine the ending inventory and cost of goods sold for 2018.
2. Assuming that operating expenses other than those indicated in the above transactions amounted to $154,000, determine income before income taxes for 2018.
