Question 42 (2 points) The basic cost of inventory on the FIFO method before any year end adjustment is $10,000. The replacement cost of the inventory, however, is only $8,000. The company anticipates that when they sell the inventory they will get $11,000 but have to pay a $2,000 sales commission. The normal gross profit on sales is 20% of the selling price. At what amount would the company carry this inventory on their year end balance sheet. 7,000 8,000 9,000 10,000 Question 43 (2 points) The basic cost of inventory on the LIFO method before any year end adjustment is $10,000. The replacement cost of the inventory, however, is only $8,000. The company anticipates that when they sell the inventory they will get $11,000 but have to pay a $2,000 sales commission. The normal gross profit on sales is 20% of the selling price. At what amount would the company carry this inventory on their year end balance sheet. 7000 8000 9000 10000 Question 44 (2 points) A company was concerned that gas prices might rise to $3/gallon, so they signed a contract in November 2020 committing to buy 10,000 gallons of gasoline for $2.50/gallon during January of 2021. On December 31, 2020 the market price of gasoline is only $2.40/gallon. How would this affect the financial statements? No effect, because no gasoline has yet been purchased. They should record the difference between the $3 and the $2.50 amount (.50 X 10,000) as a $5000 unrealized gain in 2020. They should record the difference between the $2.50 and the $2.40 amount as a 1,000 realized loss in regular income for 2020. They should record the difference between the $2.50 and the $2.40 amount as a $1000 unrealized loss in other comprehensive income for 2020. Question 45 (2 points) What accounting theory best explains the accounting treatment given to purchase commitment contracts for fuel or other commodities? Conservatism Representational faithfulness Periodicity Historical cost Question 46 (2 points) The Aging approach to estimating bad debts expense provides better Income Statement Matching than the % of Sales method. True False