Question
Wavy Inc. is a calendar-year corporation. Its financial statements for the years 2017 and 2016 contained errors as follows: 2017 2016 Ending Inventory $9,000 overstated
Wavy Inc. is a calendar-year corporation. Its financial statements for the years 2017 and 2016 contained errors as follows:
2017 | 2016 | |
---|---|---|
Ending Inventory | $9,000 overstated | $18,000 overstated |
Depreciation Expense | $6,000 understated | $13,500 overstated |
Assume that the proper correcting entries were made at December 31, 2016. By how much will 2017 income before taxes be overstated or understated?
$3,000 understated
$7,500 overstated
$10,500 overstated
$15,000 overstated
A new layer is formed under dollar-value LIFO when the ending inventory at:
end-of-year prices exceeds the beginning inventory at end-of-year prices.
end-of-year prices exceeds the beginning inventory at base-year prices.
base-year prices exceeds the beginning inventory at base-year prices.
current cost exceeds the beginning inventory at base-year cost.
Alexander Company had January 1 inventory of $150,000 when it adopted dollar-value LIFO. During the year, purchases were $900,000 and sales were $1,500,000. December 31 inventory at year-end prices was $189,750, and the price index was 110. What is Alexander Companys gross profit?
$600,000.
$624,750.
$550,250.
$450,000.
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