question on january 1 2016 happy tubs sold a hot tub to monica receiving a two month 4278048
Question
On January 1, 2016, Happy Tubs sold a hot tub to Monica,receiving a two-month, noninterest-bearing note in exchange for ahot tub that normally sells for $8,000. The note is for an amountthat achieves an effective interest rate of 10% per year.
Required:
1. Prepare the journal entry to record the sale.
2. Prepare any adjusting entry necessary on December 31,2016.
3. Prepare any adjusting entry necessary on December 31, 2017.
The Foxworthy Corporation uses a periodic inventory system andthe LIFO inventory cost method for its one product. Beginninginventory of 40,000 units consisted of the following, listed inchronological order of acquisition:
|
24,000 units at a cost of $6.00 per unit= |
$144,000 |
|
16,000 units at a cost of $7.00 per unit= |
112,000 |
During 2016, inventory quantity declined by 18,000 units. All unitspurchased during 2016 cost $8.00 per unit.
Required:
Calculate the before-tax LIFO liquidation profit or loss that thecompany would report in a disclosure note assuming the amountdetermined is material.