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.