Question :
121. Inventory RecordThe inventory record for a particular item for Year : 1246013
121. Inventory RecordThe inventory record for a particular item for Year 2 appears below.
Inventory, January 1, Year 2
20,000
$0.20
$4,000
Purchases:
March 2
4,000
.24
$ 960
April 30
3,000
.28
840
June 15
6,000
.32
1,920
September 30
2,000
.26
520
December 15
1,000
.20
200
Total purchases
16,000
$4,440
Total available for sale
36,000
$8,440
Units sold
28,000
Refer to the Inventory Record example. The cost of goods sold for year 2 under LIFO is: A. $6,120B. $6,320C. $6,520D. $6,840E. $6,940
122. Inventory RecordThe inventory record for a particular item for Year 2 appears below.
Inventory, January 1, Year 2
20,000
$0.20
$4,000
Purchases:
March 2
4,000
.24
$ 960
April 30
3,000
.28
840
June 15
6,000
.32
1,920
September 30
2,000
.26
520
December 15
1,000
.20
200
Total purchases
16,000
$4,440
Total available for sale
36,000
$8,440
Units sold
28,000
Refer to the Inventory Record example. The cost of goods sold for year 2 under weighted-average cost-flow assumption is (rounded to the nearest dollar): A. $7,772B. $6,972C. $6,564D. $6,220E. $6,020
123. A firm using FIFO had a beginning inventory of $48,000, an ending inventory of $56,000, and a pretax income of $400,000. If it had used LIFO, its beginning inventory would have been $20,000, its ending inventory would have been $16,000, and its pretax income would have been: A. $374,000B. $388,000C. $396,000D. $404,000E. $412,000
124. A firm using FIFO had a beginning inventory of $48,000, an ending inventory of $56,000, and a pretax income of $400,000. If it had used LIFO, its beginning inventory would have been $20,000, and its ending inventory would have been $16,000. From the information provided, one can conclude that: A. quantities increased and prices decreased.B. quantities decreased and prices increased.C. prices increased but we cannot conclude what happened to quantities.D. quantities decreased but we cannot conclude what happened to prices.E. not enough information to reach a conclusion.
125. Ethical issues may arise when management dips into LIFO layers A. when some LIFO liquidations are unavoidable due to shortages of raw materials.B. due to improved inventory control systems that reduce the amount of inventory needed.C. in order to manage earnings in a particular year rather than replenish inventories.D. all of the above.E. none of the above.
126. Fabulous Engine CompanyFabulous Engine Company is a wholesaler of marine engine parts. The activity of carburetor 2642J during the month of March is presented below.
Balance or
Unit
Date
Transaction
Units
Unit Cost
Sales Price
March 1
Inventory
3,200
$64.30
$86.50
4
Purchase
3,400
64.75
87.00
14
Sales
3,600
87.25
25
Purchase
3,500
66.00
87.25
28
Sales
3,450
88.00
(CMA adapted, Jun 96 #13) Refer to the Fabulous Engine Company example. If Fabulous uses a last-in, first-out periodic inventory system, the total cost of the inventory for carburetor 2642J at March 31 is A. $196,115B. $197,488C. $201,300D. $263,825E. $296,115
127. (CMA adapted, Jun 96 #15) Refer to the Fabulous Engine Company example. If Fabulous uses a weighted average periodic inventory system, the total cost of the inventory for carburetor 2642J at March 31 is A. $188,374B. $194,200C. $198,301D. $198,374E. $199,233
128. Unrealized holding gain denotes the difference between the A. current replacement cost of the inventory and its acquisition cost. B. selling price of the inventory and its original acquisition cost.C. acquisition cost of the inventory and its net realizable value.D. selling price of the inventory and its net realizable value.E. none of the above.
129. Managements face the decision as to when to replenish inventories at year-end. Assuming inflation, a company using LIFO would experience which of the following? A. Buy in December and these higher acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually lower, than December’s. B. Buy in December and these lower acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually higher, than December’s.C. Buy in December and these higher acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually higher, than December’s.D. Buy in December and these lower acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually lower, than December’s.E. none of the above
130. Sharp Inc. manufactures high quality sunglasses that carry the endorsements of several sports personalities. In an effort to achieve sales targets for the fourth quarter of the year, Sharp Inc. pressured its independent distributors to make unusually large orders of the sunglasses. Low-priced imitations of these sunglasses hit the market soon thereafter, causing the distributors to accumulate large inventories. The distributors shipped these sunglasses back to Sharp Inc. Sharp Inc.stored the returned sunglasses in a remote warehouse out of the view of its auditors and did not record them as returned goods. The actions A. are in accordance with U.S. GAAP.B. are in accordance with IFRS.C. violate ethical principles.D. are in accordance with U.S. GAAP, but not IFRS.E. are in accordance with IFRS, but not U.S. GAAP.
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