1. Tristan, Inc., uses the LIFO cost-flow assumption to value inventory. It began the current year with 1,250 units of inventory carried at LIFO cost of $55 per unit. During the first quarter, it purchased 6,250 units at an average cost of $85 per unit and sold 7,800 units at $125 per unit.

Required:

a. Assume the company does not expect to replace the units of beginning inventory sold; it plans to reduce inventory by year-end to 500 units. What amount of cost of goods sold should be recorded for the quarter ended March 31?

b.Assume the company expects to replace the units of beginning inventory sold in April at a cost of $87 per unit and expects inventory at year-end to be between 1,500 and 2,000 units. What amount of cost of goods sold should be recorded for the quarter ended March 31?

2.

Plumas, Inc., owns 90 percent of Santa Cruz Corporation. Both companies have been profitable for many years. During the current year, the parent sold for $158,500 merchandise costing $107,000 to the subsidiary, which still held 10 percent of this merchandise at the end of the year. Assume that the tax rate is 40 percent and that a consolidated tax return was filed. What deferred income tax asset amount is created?

a. $0.

b.$860.

c.$7,210.

d. $2,060.