101. The value assigned to cost of goods sold if Niles uses FIFO is
a. $1,160.
b. $1,104.
c. $3,448.
d. $3,392.
102. Emley Company has been using the LIFO method of inventory valuation for 10 years, since it began operations. Its 2017 ending inventory was $60,000, but it would have been $90,000 if FIFO had been used. Thus, if FIFO had been used, Emley's income before income taxes would have been
a. $30,000 greater over the 10-year period.
b. $30,000 less over the 10-year period.
c. $30,000 greater in 2017.
d. $30,000 less in 2017.
Transactions for the month of June were:
Purchases Sales
June 1 (balance) 3,200@ $3.20 June 2 2,400 @ $5.50
3 8,800 @ 3.10 6 6,400 @ 5.50
7 4,800 @ 3.30 9 4,000 @ 5.50
15 7,200 @ 3.40 10 1,600 @ 6.00
22 2,000 @ 3.50 18 5,600 @ 6.00
25 800 @ 6.00
103. Assuming that perpetual inventory records are kept in units only, the ending inventory on a LIFO basis is
a. $16,440.
b. $16,640.
c. $17,160.
d. $17,880.
Transactions for the month of June were:
Purchases Sales
June 1 (balance) 3,200@ $3.20 June 2 2,400 @ $5.50
3 8,800 @ 3.10 6 6,400 @ 5.50
7 4,800 @ 3.30 9 4,000 @ 5.50
15 7,200 @ 3.40 10 1,600 @ 6.00
22 2,000 @ 3.50 18 5,600 @ 6.00
25 800 @ 6.00
104. Assuming that perpetual inventory records are kept in dollars, the ending inventory on a LIFO basis is
a. $16,440.
b. $16,640.
c. $17,160.
d. $17,880.
Transactions for the month of June were:
Purchases Sales
June 1 (balance) 3,200@ $3.20 June 2 2,400 @ $5.50
3 8,800 @ 3.10 6 6,400 @ 5.50
7 4,800 @ 3.30 9 4,000 @ 5.50
15 7,200 @ 3.40 10 1,600 @ 6.00
22 2,000 @ 3.50 18 5,600 @ 6.00
25 800 @ 6.00
105. Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is
a. $16,440.
b. $16,640.
c. $17,160.
d. $17,880.
Transactions for the month of June were:
Purchases Sales
June 1 (balance) 3,200@ $3.20 June 2 2,400 @ $5.50
3 8,800 @ 3.10 6 6,400 @ 5.50
7 4,800 @ 3.30 9 4,000 @ 5.50
15 7,200 @ 3.40 10 1,600 @ 6.00
22 2,000 @ 3.50 18 5,600 @ 6.00
25 800 @ 6.00
106. Assuming that perpetual inventory records are kept in units only, the ending inventory on an average-cost basis, rounded to the nearest dollar, is
a. $16,384.
b. $16,952.
c. $17,160.
d. $17,280.
107. Milford Company had 500 units of “Tank” in its inventory at a cost of $4 each. It purchased, for $2,800, 300 more units of “Tank”. Milford then sold 400 units at a selling price of $10 each, resulting in a gross profit of $1,600. The cost flow assumption used by Milford
a. is FIFO.
b. is LIFO.
c. is weighted average.
d. cannot be determined from the information given.
108. Nichols Company had 500 units of “Dink” in its inventory at a cost of $5 each. It purchased, for $2,400, 300 more units of “Dink”. Nichols then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,100. The cost flow assumption used by Nichols.
a. is FIFO.
b. is LIFO.
c. is weighted average.
d. cannot be determined from the information given.
109. June Corp. sells one product and uses a perpetual inventory system. The beginning inventory consisted of 80 units that cost $20 per unit. During the current month, the company purchased 480 units at $20 each. Sales during the month totaled 360 units for $43 each. What is the number of units in the ending inventory?
a. 80 units.
b. 120 units.
c. 200 units.
d. 560 units.
110. June Corp. sells one product and uses a perpetual inventory system. The beginning inventory consisted of 80 units that cost $20 per unit. During the current month, the company purchased 480 units at $20 each. Sales during the month totaled 360 units for $43 each. What is the cost of goods sold using the LIFO method?
a. $1,600.
b. $7,200.
c. $9,600.
d. $15,480.
111. Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7,200 units that cost $12 each. During the month, the company made two purchases: 3,000 units at $13 each and 12,000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month?
a. $167,055.
b. $173,700.
c. $161,850.
d. $167,700.
112. Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 480 units that cost $65 each. During the month, the company made two purchases: 720 units at $68 each and 360 units at $70 each. Chess Top also sold 1,200 units during the month. Using the average cost method, what is the amount of ending inventory?
a. $25,200.
b. $81,048.
c. $80,160.
d. $24,314.
113. Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7,200 units that cost $12 each. During the month, the company made two purchases: 3,000 units at $13 each and 12,000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the FIFO method, what is the ending inventory?
a. $120,438.
b. $111,600.
c. $125,550.
d. $113,700.
114. Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 480 units that cost $65 each. During the month, the company made two purchases: 720 units at $68 each and 360 units at $70 each. Chess Top also sold 1,200 units during the month. Using the FIFO method, what is the amount of cost of goods sold for the month?
a. $81,048.
b. $78,000.
c. $81,960.
d. $80,160.
115. Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7,200 units that cost $12 each. During the month, the company made two purchases: 3,000 units at $13 each and 12,000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the LIFO method, what is the ending inventory?
a. $120,438.
b. $111,600.
c. $125,550.
d. $113,700.
116. Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 480 units that cost $65 each. During the month, the company made two purchases: 720 units at $68 each and 360 units at $70 each. Chess Top also sold 1,200 units during the month. Using the LIFO method, what is the amount of cost of goods sold for the month?
a. $81,048.
b. $78,000.
c. $81,960.
d. $80,160.
117. Black Corporation uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2017 was $280,000. The balance in the same account at the end of 2018 is $420,000. Black’s Cost of Goods Sold account has a balance of $2,100,000 from sales transactions recorded during the year. What amount should Black report as Cost of Goods Sold in the 2018 income statement?
a. $1,960,000.
b. $2,100,000.
c. $2,240,000.
d. $2,520,000.
118. White Corporation uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2017 was $320,000. The balance in the same account at the end of 2018 is $480,000. White’s Cost of Goods Sold account has a balance of $2,400,000 from sales transactions recorded during the year. What amount should White report as Cost of Goods Sold in the 2018 income statement?
a. $2,240,000.
b. $2,240,000.
c. $2,560,000.
d. $2,880,000.
119. Milford Company had 600 units of “Tank” in its inventory at a cost of $6 each. It purchased 900 more units of “Tank” at a cost of $9 each. Milford then sold 1,050 units at a selling price of $15 each. The LIFO liquidation overstated normal gross profit by
a. $ -0-
b. $450.
c. $900.
d. $1,350.
120. Nichols Company had 600 units of “Dink” in its inventory at a cost of $12 each. It purchased 900 more units of “Dink” at a cost of $18 each. Nichols then sold 1,050 units at a selling price of $30 each. The LIFO liquidation overstated normal gross profit by
a. $ -0-
b. $ 900.
c. $1,800.
d. $2,700.
RF Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $430,080, and the price index was 112.
121. What is RF Company’s ending inventory?
a. $300,000.
b. $384,000.
c. $394,080.
d. $430,080.
RF Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $430,080, and the price index was 112.
122. What is RF Company’s gross profit?
a. $1,248,000.
b. $1,294,080.
c. $1,330,380.
d. $2,605,920.
Hay Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $379,500, and the price index was 110.
123. What is Hay Company’s ending inventory?
a. $330,000.
b. $345,000.
c. $349,500.
d. $379,500.
Hay Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $379,500, and the price index was 110.
124. What is Hay Company’s gross profit?
a. $1,245,000.
b. $1,249,500.
c. $1,279,500.
d. $2,650,500.
Use the following information for questions 125 through 127.
Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2016. Its inventory at that date was $1,100,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:
Inventory at Current
Date Current Prices Price Index
December 31, 2017 $1,284,000 107
December 31, 2018 1,450,000 125
December 31, 2019 1,625,500 130
125. What is the cost of the ending inventory at December 31, 2017 under dollar-value LIFO?
a. $1,200,000.
b. $1,284,000.
c. $1,207,000.
d. $1,177,000.
126. What is the cost of the ending inventory at December 31, 2018 under dollar-value LIFO?
a. $1,160,000.
b. $1,157,000.
c. $1,164,200.
d. $1,200,000.
127. What is the cost of the ending inventory at December 31, 2019 under dollar-value LIFO?
a. $1,281,200.
b. $1,274,000.
c. $1,250,000.
d. $1,317,000.
128. Wise Company adopted the dollar-value LIFO method on January 1, 2017, at which time its inventory consisted of 6,000 units of Item A @ $5.00 each and 3,000 units of Item B @ $16.00 each. The inventory at December 31, 2017 consisted of 12,000 units of Item A and 7,000 units of Item B. The most recent actual purchases related to these items were as follows:
Quantity
Items Purchase Date Purchased Cost Per Unit
A 12/7/17 2,000 $ 6.00
A 12/11/17 10,000 5.75
B 12/15/17 7,000 17.00
Using the double-extension method, what is the price index for 2017 that should be computed by Wise Company?
a. 108.33%
b. 109.59%
c. 111.05%
d. 220.51%
129. Web World began using dollar-value LIFO for costing its inventory last year. The base year layer consists of $600,000. Assuming the current inventory at end of year prices equals $828,000 and the index for the current year is 1.10, what is the ending inventory using dollar-value LIFO?
a. $828,000.
b. $768,000.
c. $752,727.
d. $910,800.
130. Willy World began using dollar-value LIFO for costing its inventory two years ago. The ending inventory for the past two years in end-of-year dollars was $300,000 and $450,000 and the year-end price indices were 1.0 and 1.2, respectively. Assuming the current inventory at end of year prices equals $645,000 and the index for the current year is 1.25, what is the ending inventory using dollar-value LIFO?
a. $532,500.
b. $559,200.
c. $570,000.
d. $566,250.
131. Opera Corp. uses the dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows:
Year ended Inventory at Price
December 31. End-of-year Prices Index
2016 $650,000 1.00
2017 1,260,000 1.05
2018 1,350,250 1.10
What is the 2016 inventory balance using dollar-value LIFO?
a. $650,000.
b. $619,040.
c. $1,227,270.
d. $1,350,250.
132. Opera Corp. uses dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows:
Year ended Inventory at Price
December 31. End-of-year Prices Index
2016 $ 650,000 1.00
2017 1,260,000 1.05
2018 1,350,250 1.10
What is the 2017 inventory balance using dollar-value LIFO?
a. $1,260,000.
b. $1,285,000.
c. $1,227,500.
d. $1,257,500.
133. Opera Corp. uses dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows:
Year ended Inventory at Price
December 31. End-of-year Prices Index
2016 $ 650,000 1.00
2017 1,260,000 1.05
2018 1,350,250 1.10
What is the 2018 inventory balance using dollar-value LIFO?
a. $1,350,250.
b. $1,285,000.
c. $1,227,500.
d. $1,257,750.
MULTIPLE CHOICE—CPA Adapted
134. How should the following costs affect a retailer's inventory valuation?
Freight-in Interest on Inventory Loan
a. Increase No effect
b. Increase Increase
c. No effect Increase
d. No effect No effect
135. The following information applied to Howe, Inc. for 2017:
Merchandise purchased for resale $410,000
Freight-in 8,000
Freight-out 5,000
Purchase returns 2,000
Howe's 2017 inventoriable cost was
a. $410,000.
b. $413,000.
c. $416,000.
d. $421,000.
136. The following information was derived from the 2017 accounting records of Perez Co.:
Perez's Goods
Perez's Central Warehouse Held by Consignees
Beginning inventory $130,000 $ 14,000
Purchases 625,000 70,000
Freight-in 10,000
Transportation to consignees 5,000
Freight-out 30,000 8,000
Ending inventory 145,000 20,000
Perez's 2017 cost of sales was
a. $620,000.
b. $650,000.
c. $684,000.
d. $689,000.
137. Dole Corp.'s accounts payable at December 31, 2017, totaled $900,000 before any necessary year-end adjustments relating to the following transactions:
• On December 27, 2017, Dole wrote and recorded checks to creditors totaling $350,000 causing an overdraft of $100,000 in Dole's bank account at December 31, 2017. The checks were mailed out on January 10, 2018.
• On December 28, 2017, Dole purchased and received goods for $150,000, terms 2/10, n/30. Dole records purchases and accounts payable at net amounts. The invoice was recorded and paid January 3, 2018.
• Goods shipped f.o.b. destination on December 20, 2017 from a vendor to Dole were received January 2, 2018. The invoice cost was $65,000.
At December 31, 2017, what amount should Dole report as total accounts payable?
a. $1,462,000.
b. $1,397,000.
c. $1,150,000.
d. $1,050,000.
138. The balance in Moon Co.'s accounts payable account at December 31, 2017 was $980,000 before any necessary year-end adjustments relating to the following:
• Goods were in transit to Moon from a vendor on December 31, 2017. The invoice cost was $40,000. The goods were shipped f.o.b. shipping point on December 29, 2017 and were received on January 4, 2018.
• Goods shipped f.o.b. destination on December 21, 2017 from a vendor to Moon were received on January 6, 2018. The invoice cost was $25,000.
• On December 27, 2017, Moon wrote and recorded checks to creditors totaling $30,000 that were mailed on January 10, 2018.
In Moon's December 31, 2017 balance sheet, the accounts payable should be
a. $1,010,000.
b. $1,020,000.
c. $1,045,000.
d. $1,050,000.
139. Kerr Co.'s accounts payable balance at December 31, 2017 was $1,600,000 before considering the following transactions:
• Goods were in transit from a vendor to Kerr on December 31, 2017. The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on December 29, 2017. The goods were received on January 4, 2018.
• Goods shipped to Kerr, f.o.b. shipping point on December 20, 2017, from a vendor were lost in transit. The invoice price was $50,000. On January 5, 2018, Kerr filed a $50,000 claim against the common carrier.
In its December 31, 2017 balance sheet, Kerr should report accounts payable of
a. $1,720,000.
b. $1,670,000.
c. $1,650,000.
d. $1,600,000.
140. Walsh Retailers purchased merchandise with a list price of $150,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this merchandise as
a. $105,000.
b. $108,000.
c. $117,000.
d. $150,000.
141. On June 1, 2017, Penny Corp. sold merchandise with a list price of $70,000 to Linn on account. Penny allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made f.o.b. shipping point. Penny prepaid $1,000 of delivery costs for Linn as an accommodation. On June 12, 2017, Penny received from Linn a remittance in full payment amounting to
a. $38,416.
b. $39,788.
c. $39,416.
d. $39,186.
142. Groh Co. recorded the following data pertaining to raw material X during January 2017:
Units
Date Received Cost Issued On Hand
1/1/17 Inventory $2.00 3,200
1/11/17 Issue 1,600 1,600
1/22/17 Purchase 4,000 $2.35 5,600
The moving-average unit cost of X inventory at January 31, 2017 is
a. $2.17.
b. $2.21.
c. $2.25.
d. $2.35.
143. During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory cost flow methods?
FIFO LIFO
a. Yes No
b. Yes Yes
c. No Yes
d. No No
144. Hite Co. was formed on January 2, 2017, to sell a single product. Over a two-year period, Hite's acquisition costs have increased steadily. Physical quantities held in inventory were equal to three months' sales at December 31, 2017, and zero at December 31, 2018. Assuming the periodic inventory system, the inventory cost method which reports the highest amount of each of the following is
Inventory Cost of Sales
December 31, 2017 2018
a. LIFO FIFO
b. LIFO LIFO
c. FIFO FIFO
d. FIFO LIFO
145. Keck Co. had 300 units of product A on hand at January 1, 2017, costing $21 each. Purchases of product A during January were as follows:
Date Units Unit Cost
Jan. 10 400 $22
18 500 23
28 200 24
A physical count on January 31, 2017 shows 400 units of product A on hand. The cost of the inventory at January 31, 2017 under the LIFO method is
a. $9,400.
b. $8,900.
c. $8,500.
d. $8,200.
146. When the double-extension approach to the dollar-value LIFO inventory cost flow method is used, the inventory layer added in the current year is multiplied by an index number. How would the following be used in the calculation of this index number?
Ending inventory Ending inventory
at current year cost at base year cost
a. Numerator Denominator
b. Numerator Not used
c. Denominator Numerator
d. Not used Denominator
147. Farr Co. adopted the dollar-value LIFO inventory method on December 31, 2017. Farr's entire inventory constitutes a single pool. On December 31, 2017, the inventory was $960,000 under the dollar-value LIFO method. Inventory data for 2018 are as follows:
12/31/18 inventory at year-end prices $1,320,000
Relevant price index at year end (base year 2017) 110
Using dollar value LIFO, Farr's inventory at December 31, 2018 is
a. $1,056,000.
b. $1,224,000.
c. $1,200,000.
d. $1,320,000.
