14. Scotland Corporation obtained a $40,000 note receivable from a customer on June 30, 2015. The note, along with interest at 6%, is due on June 30, 2016. On September 30, 2015, Scotland discounted the note at Cloverdale bank. The bank's discount rate is 10%. What amount of cash did Scotland receive from Cloverdale Bank?

A. $40,600

B. $36,000

C. $39,220

D. $36,820

15. On January 1, 2015, Ferret, Inc., adopted the dollar-value LIFO method. The inventory cost on this date was $100,000. The 2015 ending inventory, valued at year-end costs, was $126,000. The relative cost index for this inventory in 2015 was 1.05. What inventory balance should Ferret report on its 12/31/15 balance sheet?

A. $121,000

B. $100,000

C. $126,000

D. $120,000

16. Donut Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,000, and its ending inventory on December 31 was understated by $17,000. In addition, a purchase of merchandise costing $20,000 was incorrectly recorded as a $2,000 purchase. None of these errors were discovered until the next year. As a result, Donut's cost of goods sold for this year was

A. overstated by $5,000.

B. understated by $48,000.

C. overstated by $31,000.

D. understated by $31,000.

17. Bobby Corporation has determined its year-end inventory on a FIFO basis to be $500,000. Information pertaining to that inventory is as follows:

Selling price $520,000 Normal profit margin 60,000

Disposal costs 30,000 Replacement cost 440,000

What should be the carrying value of Bobby's inventory if the company prepares its financial statements according to International Financial Reporting Standards?

A. $440,000

B. $500,000

C. $490,000

D. $430,000

18. The conventional retail inventory method is based on

A. LIFO, lower of cost, or net realizable value.

B. LIFO cost.

C. average cost.

D. average, lower of cost or net realizable value

19. Pi Company reported the following pretax data for its first year of operations.

Net sales 2,800

Cost of goods available for sale 2,500

Operating expenses 880

Effective tax rate 40%

Ending inventories:

If LIFO is elected 820

If FIFO is elected 1,060

What's Pi's net income if it elects LIFO?

A. $144

B. $480

C. $240

D. $288

20. Pi Company reported the following pretax data for its first year of operations.

Net sales 2,800

Cost of goods available for sale 2,500

Operating expenses 880

Effective tax rate 40%

Ending inventories:

If LIFO is elected 820

If FIFO is elected 1,060

What's Pi's gross profit ratio if it elects LIFO?

A. 5%

B. 80%

C. 40%

D. 49%