The following information pertains to Hague Corp.s Year 2 cost of goods sold:

Inventory, 12/31/Year 1 Year 2 purchases Year 2 write-off of obsolete inventory Inventory, 12/31/Year 2

$180,000 248,000 68,000 60,000

The inventory written off became obsolete because of an unexpected and unusual technological advance by a competitor. In its Year 2 income statement, what amount should Hague report as cost of goods sold?

A. $436,000 B. $368,000 C. $300,000 D. $248,000

[2] During December of Year 1, Nile Co. incurred special insurance costs but did not record these costs until payment was made during the following year. These insurance costs related to inventory that had been sold by December 31, Year 1. What is the effect of the omission on Niles accrued liabilities and retained earnings at December 31, Year 1?

A. B. C. D.

Accrued Liabilities

No effect

No effect Understated Understated

Retained Earnings

No effect Overstated Overstated No effect

[3] The following information applied to Atlas Co. for the current year:

Merchandise purchased for resale Freight-in Freight-out Purchase returns

$800,000 20,000 10,000 4,000

The companys current-year inventoriable cost was

A. $800,000 B. $806,000 C. $816,000 D. $826,000

2019 Gleim Publications Inc. Inventory 0219 1

[4] Heidelberg Co.s beginning inventory at January 1 was understated by $52,000, and its ending inventory was overstated by $104,000. As a result, Heidelbergs cost of goods sold for the year was

A. Understated by $52,000. B. Overstated by $52,000. C. Understated by $156,000. D. Overstated by $156,000.

[5] Lew Co. sold 200,000 corrugated boxes for $2 each. Lews cost was $1 per unit. The sales agreement gave the customer the right to return up to 60% of the boxes within the first 6 months, provided an appropriate reason was given. It was reasonably estimated that 5% of the boxes would be returned. Lew expects an additional $3,000 of costs to recover those boxes. What amount should Lew report as gross profit from this transaction?

A. $380,000 B. $190,000 C. $187,000 D. $200,000

[6] On January 2 of the current year, LTTI Co. entered into a 3-year, noncancelable contract to buy up to 1 million units of a product each year at $.10 per unit with a minimum annual guarantee purchase of 200,000 units. At year end, LTTI had only purchased 80,000 units and decided to cancel sales of the product. What amount should LTTI report as a loss related to the purchase commitment as of December 31 of the current year?

A. $0 B. $8,000 C. $12,000 D. $52,000