Question : 61. Super Short Shorts estimates that unsold women’s clothing with a : 1230667

61. Super Short Shorts estimates that unsold women’s clothing with a carrying value of $500 million has minimal market value given a change in fashion. To reflect the minimal market value of the merchandise, Super Short Shorts  
A. would record an impairment loss of $500 million, reducing the carrying value of this inventory to zero.
B. would recognize zero cost of goods sold and a gross margin of $100 million on the sale, for a net margin of -$400 (=-$500 + $100) million over the two periods, if the firm sells the clothes for $100 million in a subsequent accounting period.
C. would record an impairment loss of $400 million, reducing the carrying value of this inventory to $100 million.
D. would recognize $100 million of cost of goods sold and a gross margin of zero on the sale, for a net margin of -$400 (=-$500 + $100) million over the two periods, if the firm sells the clothes for $100 million in a subsequent accounting period, if the firm sells the clothes for $100 million in a subsequent accounting period.
E. choices a and b

62. Urban Bicycle

Urban Bicycle , a cycling store has a beginning inventory of one bi-level touring bicycle 1, for which it paid $2,500. Suppose that during the period the store purchases bi-level touring bicycle 2 for $2,900 and bi-level touring bicycle 3 for $3,000, and that it sells one bicycle for $5,500. The three bicycles are physically identical; the store acquired them at different times as their acquisition costs changed, so only their costs differ.

Using the Urban Bicycle example, suppose the cycling store uses the specific identification system, and uses serial numbers or product bar codes to identify bi-level touring bicycle 2 as the unit sold. The cost of goods sold is _____, and the ending inventory is _____. 
A. $2,900; $5,500
B. $2,500; $5,900
C. $3,000; $5,400
D. $2,800; $5,600
E. cannot be determined with the information given

63. Urban Bicycle

Urban Bicycle , a cycling store has a beginning inventory of one bi-level touring bicycle 1, for which it paid $2,500. Suppose that during the period the store purchases bi-level touring bicycle 2 for $2,900 and bi-level touring bicycle 3 for $3,000, and that it sells one bicycle for $5,500. The three bicycles are physically identical; the store acquired them at different times as their acquisition costs changed, so only their costs differ.

Using the Urban Bicycle example, suppose the cycling store uses the weighted-average cost-flow assumption. The cost of goods sold is _____, and the ending inventory is _____. 
A. $2,900; $5,500
B. $2,500; $5,900
C. $3,000; $5,400
D. $2,800; $5,600
E. cannot be determined with the information given

64. Urban Bicycle

Urban Bicycle , a cycling store has a beginning inventory of one bi-level touring bicycle 1, for which it paid $2,500. Suppose that during the period the store purchases bi-level touring bicycle 2 for $2,900 and bi-level touring bicycle 3 for $3,000, and that it sells one bicycle for $5,500. The three bicycles are physically identical; the store acquired them at different times as their acquisition costs changed, so only their costs differ.

Using the Urban Bicycle example, suppose the cycling store uses the FIFO cost-flow assumption. The cost of goods sold is _____, and the ending inventory is _____.  
A. $2,900; $5,500
B. $2,500; $5,900
C. $3,000; $5,400
D. $2,800; $5,600
E. cannot be determined with the information given

65. Urban Bicycle

Urban Bicycle , a cycling store has a beginning inventory of one bi-level touring bicycle 1, for which it paid $2,500. Suppose that during the period the store purchases bi-level touring bicycle 2 for $2,900 and bi-level touring bicycle 3 for $3,000, and that it sells one bicycle for $5,500. The three bicycles are physically identical; the store acquired them at different times as their acquisition costs changed, so only their costs differ.

Suppose the cycling store uses the LIFO cost-flow assumption. The cost of goods sold is _____, and the ending inventory is _____.  
A. $2,900; $5,500
B. $2,500; $5,900
C. $3,000; $5,400
D. $2,800; $5,600
E. cannot be determined with the information given

66. Firms do not use LIFO because it 
A. produces a cost of goods sold figure based on more recent purchase prices
B. results in lower net income
C. results in reduced tax payments
D. matches the actual flow of goods
E. all of the above

67. In periods of rising purchase prices and increasing inventory quantities, LIFO results in a _____ than either FIFO or the weighted-average cost-flow assumption.  
A. higher cost of goods sold; lower reported periodic income; lower current income taxes
B. lower cost of goods sold; lower reported periodic income; lower current income taxes
C. higher cost of goods sold; higher reported periodic income; lower current income taxes
D. higher cost of goods sold; higher reported periodic income; higher current income taxes
E. a lower cost of goods sold; higher reported periodic income; higher current income taxes

68. In periods of falling purchase prices and increasing inventory quantities, LIFO results in a _____ than either FIFO or the weighted-average cost-flow assumption.  
A. higher cost of goods sold; lower reported periodic income; lower current income taxes
B. lower cost of goods sold; lower reported periodic income; lower current income taxes
C. higher cost of goods sold; higher reported periodic income; lower current income taxes
D. higher cost of goods sold; higher reported periodic income; higher current income taxes
E. a lower cost of goods sold; higher reported periodic income; higher current income taxes

69. Of the three cost-flow assumptions, when prices rise FIFO results in balance sheet figures that are _____, cost of goods sold will _____, and _____ reported net income 
A. closest to current cost, be out of date, highest
B. out of date, closest to current cost, highest
C. closest to current cost, be out of date, lowest
D. out of date, closest to current cost, lowest
E. closest to current cost, closest to current cost, highest

70. Of the three cost-flow assumptions, when inventory costs have been rising and inventory amounts increasing, LIFO results in balance sheet figures that are _____, cost of goods sold will _____, and _____ reported net income 
A. closest to current cost, be out of date, highest
B. out of date, closest to current cost, highest
C. closest to current cost, be out of date, lowest
D. out of date, closest to current cost, lowest
E. closest to current cost, closest to current cost, highest