1) In 2015, Timmers, Inc. (a retail clothing company) sold 222,000 units of its product at an average price of $50.00 per unit. The company reported estimated returns and allowances in 2015 of 2.0 percent of gross revenue. Timmers actually purchased 210,000 units of its product from its manufacturer in 2015 at an average cost of $30.00 per unit. Timmers began 2015 with 20,000 units of its product in inventory (carried at an average cost of $30.00 per unit). Operating expenses (excluding depreciation) for Timmers, Inc. in 2015 were $1,250,000 and depreciation expense was $250,000. Timmers had $4,500,000 in debt outstanding throughout all of 2015. This debt carried an average interest rate of 8.0 percent. Finally, Timmers’ tax rate was 40 percent. Timmers’ fiscal year runs from January 1 through December 31. Given this information, compute net income for Timmers for 2015.
2) Referring back to the previous problem, compute Timmers’ ending inventory balance for 2015 (that is, what did Timmers report as inventory on its December 31, 2015 balance sheet).