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Question 3 Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list
- Question 3 Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list price amount of $6,000 and payment terms of 2/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:
- $5,940.
- $5,880.
- $6,000.
- $6,120.
3.704 points
Question 4- Cinnamon Buns Co. (CBC) started 2016 with $52,000 of merchandise on hand. During 2016, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
- What is cost of goods available for sale, assuming CBC uses the gross method?
- $312,480.
- $326,000.
- $331,480.
- $337,000.
3.704 points
Question 5- The LIFO Conformity Rule states that if LIFO is used for:
- One class of inventory, it must be used for all classes of inventory.
- Tax purposes, it must be used for financial reporting.
- One company in an affiliated group, it must be used by all companies in an affiliated group.
- Domestic companies, it must be used by foreign partners.
3.704 points
Question 6- Texas Petrochemical reported the following April activity for its VC-30 lubricant, which had a balance of 300 qts. @ $2.40 on April 1.
- Purchases:Sales:Apr. 10500 qts @ $2.50Apr. 3200 qtsApr. 14400 qts @ $2.60Apr. 12500 qtsApr. 20400 qts @ $2.65Apr. 26300 qts
- The ending inventory assuming LIFO and a periodic inventory system is:
- $1,580.
- $1,510.
- $1,575.
- $1,470.
3.704 points
Question 7- Cost of goods sold is given by:
- Beginning inventory - net purchases + ending inventory.
- Beginning inventory + accounts payable - net purchases.
- Net purchases + ending inventory - beginning inventory.
- Net Purchases + beginning inventory - ending inventory.
3.704 points
Question 8- The largest expense on a retailer's income statement is typically:
- Salaries and wages.
- Cost of goods sold.
- Income tax expense.
- Depreciation expense.
3.704 points
Question 9- In a perpetual inventory system, the cost of inventory sold is:
- Debited to accounts receivable.
- Credited to cost of goods sold.
- Debited to cost of goods sold.
- Not recorded at the time goods are sold.
3.704 points
Question 10- In a periodic inventory system, the cost of purchases is debited to:
- Purchases.
- Cost of goods sold.
- Inventory.
- Accounts payable.
3.704 points
Question 11- The Mateo Corporation's inventory at December 31, 2016, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
- Merchandise costing $30,000, shipped f.o.b. shipping point from a vendor on December 30, 2016, was received on January 5, 2017.
- Merchandise costing $22,000, shipped f.o.b. destination from a vendor on December 28, 2016, was received on January 3, 2017.
- Merchandise costing $38,000 was shipped to a customer f.o.b. destination on December 28, arrived at the customer's location on January 6, 2017.
- Merchandise costing $12,000 was being held on consignment by Traynor Company.
- What amount should Mateo Corporation report as inventory in its December 31, 2016, balance sheet?
- $367,000.
- $427,000.
- $405,000.
- $325,000.
3.704 points
Question 12- Inventory does not include:
- Materials used in the production of goods to be sold.
- Assets intended to be sold in the normal course of business.
- The cost of office equipment.
- Assets currently in production for normal sales.
3.704 points
Question 13- Purchases equal the invoice amount:
- Plus freight-in, plus discounts lost.
- Less purchase returns, plus purchase allowances.
- Plus freight-in, less purchase discounts.
- Plus discounts, less purchase returns.
3.704 points
Question 14- Nu Company reported the following pretax data for its first year of operations.
- Net sales2,800Cost of goods available for sale2,500Operating expenses880Effective tax rate40%Ending inventories:If LIFO is elected820If FIFO is elected1,060
- What is Nu's net income if it elects FIFO?
- $480.
- $288.
- $1,360.
- $144.
3.704 points
Question 15- In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:
- Weighted average.
- LIFO.
- Moving average.
- FIFO.
3.704 points
Question 16- The primary reason for the popularity of LIFO is that it:
- Provides better matching of physical flow and cost flow.
- Saves income taxes currently.
- Simplifies recordkeeping.
- Provides a permanent reduction of income taxes.
3.704 points
Question 17- Inventory records for Herb's Chemicals revealed the following:
- March 1, 2016, inventory: 1,000 gallons @ $7.20 = $7,200
- Purchases:Sales:Mar. 10600 gals @ $7.25Mar. 5400 galsMar. 16800 gals @ $7.30Mar. 14700 galsMar. 23600 gals @ $7.35Mar. 20500 galsMar. 26700 gals
- The ending inventory under a periodic inventory system assuming average cost (rounding unit cost to three decimal places) is:
- $5,087.
- $5,107.
- $5,077.
- $5,005.
3.704 points
Question 18- Nu Company reported the following pretax data for its first year of operations.
- Net sales2,800Cost of goods available for sale2,500Operating expenses880Effective tax rate40%Ending inventories:If LIFO is elected820If FIFO is elected1,060
- What is Nu's net income if it elects LIFO?
- $288.
- $144.
- $240.
- $480.
3.704 points
Question 19- Ending inventory is equal to the cost of items on hand plus:
- Items in transit sold f.o.b. shipping point.
- Purchases in transit f.o.b. destination.
- Items in transit sold f.o.b. destination.
- None of these answer choices is correct.
3.704 points
Question 20- The use of LIFO in accounting for a firm's inventory:
- Usually matches the physical flow of goods through the business.
- Is usually used for internal management purposes.
- Usually provides a better match of expenses with revenues.
- None of these answer choices is correct.
3.704 points
Question 21- Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
- 40 units at $100
- 70 units at $80
- 170 units at $60
- Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.
- Ending inventory using the LIFO method is:
- $1,000.
- $650.
- $707.
- $1,000.
- $600.
- $707.
- $600.
3.704 points
Question 22- Cinnamon Buns Co. (CBC) started 2016 with $52,000 of merchandise on hand. During 2016, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
- Assuming CBC uses the gross method to record purchases, ending inventory would be:
- $6,480.
- $15,400.
- $15,480.
- $21,000.
3.704 points
Question 23- Nueva Company reported the following pretax data for its first year of operations.
- Net sales7,340Cost of goods available for sale5,790Operating expenses1728Effective tax rate40%Ending inventories:If LIFO is elected618If FIFO is elected798
- What is Nueva's net income if it elects FIFO?
- $264.
- $440.
- $620.
- $264.
- $372.
- $620.
- $372.
3.704 points
Question 24- In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:
- Weighted average.
- Moving average.
- FIFO.
- LIFO.
3.704 points
Question 25- Nueva Company reported the following pretax data for its first year of operations.
- Net sales7,340Cost of goods available for sale5,790Operating expenses1728Effective tax rate40%Ending inventories:If LIFO is elected618If FIFO is elected798
- What is Nueva's net income if it elects LIFO?
- $440.
- $264.
- $620.
- $372.
3.704 points
Question 26- In a perpetual inventory system, the cost of purchases is debited to:
- Purchases.
- Cost of goods sold.
- Inventory.
- Accounts payable.
3.704 points
Question 27- Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
- 40 units at $100
- 70 units at $80
- 170 units at $60
- Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.
- Ending inventory using the FIFO method is:
- $1,000.
- $650.
- $707.
- $1,000.
- $600.
- $707.
- $600.
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