All Related Questions of Lifo

Q: The adjusted trial balance of Eastwood Company and other related information for

The adjusted trial balance of Eastwood Company and other related information for the year 2014 are presented as follows. Additional information: 1. The LIFO method of inventory value is used....

Q: Use the information for Boyne Inc. from BE9-8.

Use the information for Boyne Inc. from BE9-8. Compute ending inventory at cost using the LIFO retail method. In BE9-8 Boyne Inc. had beginning inventory of $12,000 at cost and $20,000 at retail. Net...

Q: Use the information for Boyne Inc. from BE9-8,

Use the information for Boyne Inc. from BE9-8, and assume the price level increased from 100 at the beginning of the year to 115 at year-end. Compute ending inventory at cost using the dollar-value LI...

Q: Helen Keller Company began operations on January 1, 2013, adopting

Helen Keller Company began operations on January 1, 2013, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2013 and, because there was no b...

Q: Leonard Bernstein Company began operations late in 2013 and adopted the conventional

Leonard Bernstein Company began operations late in 2013 and adopted the conventional retail inventory method. Because there was no beginning inventory for 2013 and no markdowns during 2013, the ending...

Q: You assemble the following information for Seneca Department Store, which computes

You assemble the following information for Seneca Department Store, which computes its inventory under the dollar-value LIFO method. Instructions Compute the cost of the inventory on December 31, 2...

Q: Presented below is information related to Langston Hughes Corporation./

Presented below is information related to Langston Hughes Corporation. Instructions Compute the ending inventory under the dollar-value LIFO method at December 31, 2015. The cost-to retail ratio fo...

Q: Amiras Corporation began operations on January 1, 2014, with a

Amiras Corporation began operations on January 1, 2014, with a beginning inventory of $30,100 at cost and $50,000 at retail. The following information relates to 2014. Instructions (a) Assume Amira...

Q: Connie Chung Corporation adopted the dollar-value LIFO retail inventory method

Connie Chung Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2013. At that time the inventory had a cost of $54,000 and a retail price of $100,000. The following inform...

Q: John Olerud Ltd., a local retailing concern in the Bronx,

John Olerud Ltd., a local retailing concern in the Bronx, New York, has decided to change from the conventional retail inventory method to the LIFO retail method starting on January 1, 2015. The compa...

Q: As of January 1, 2014, Aristotle Inc. installed the

As of January 1, 2014, Aristotle Inc. installed the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2014, you obtain the follow...

Q: Diderot Stores Inc., which uses the conventional retail inventory method,

Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2014. Amounts as shown below...

Q: Davenport Department Store converted from the conventional retail method to the LIFO

Davenport Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2014, and is now considering converting to the dollar-value LIFO inventory method. Duri...

Q: Presented below is information related to Langston Hughes Corporation./

Presented below is information related to Langston Hughes Corporation. Instructions Compute the ending inventory under the dollar-value LIFO method at December 31, 2015. The cost-to retail ratio fo...

Q: Ogala Corporation purchased a significant amount of raw materials inventory for a

Ogala Corporation purchased a significant amount of raw materials inventory for a new product that it is manufacturing. Ogala uses the lower-of-cost-or-market rule for these raw materials. The replace...

Q: Amiras Corporation began operations on January 1, 2014, with a

Amiras Corporation began operations on January 1, 2014, with a beginning inventory of $30,100 at cost and $50,000 at retail. The following information relates to 2014. Instructions (a) Assume Amira...

Q: Connie Chung Corporation adopted the dollar-value LIFO retail inventory method

Connie Chung Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2013. At that time the inventory had a cost of $54,000 and a retail price of $100,000. The following inform...

Q: John Olerud Ltd., a local retailing concern in the Bronx,

John Olerud Ltd., a local retailing concern in the Bronx, New York, has decided to change from the conventional retail inventory method to the LIFO retail method starting on January 1, 2015. The compa...

Q: Midori Company had ending inventory at end-of-year prices

Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2013; $119,900 at December 31, 2014; and $134,560 at December 31, 2015. The year-end price indexes were 100 at 1...

Q: Arna, Inc. uses the dollar-value LIFO method of

Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow. Instructions Compute the value of the 2014 and 2015 inventories using the dollar-valu...

Q: FIFO, average-cost, and LIFO methods are often used

FIFO, average-cost, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing the...

Q: Inventory information for Part 311 of Monique Aaron Corp. discloses the

Inventory information for Part 311 of Monique Aaron Corp. discloses the following information for the month of June. Instructions (a) Assuming that the periodic inventory method is used, compu...

Q: John Adams Company’s record of transactions for the month of April was

John Adams Company’s record of transactions for the month of April was as follows. Instructions (a) Assuming that periodic inventory records are kept in units only, compute the inventory...

Q: Johnny Football Shop began operations on January 2, 2014. The

Johnny Football Shop began operations on January 2, 2014. The following stock record card for footballs was taken from the records at the end of the year. A physical inventory on December 31, 2...

Q: Describe the LIFO double-extension method. Using the following information

Describe the LIFO double-extension method. Using the following information, compute the index at December 31, 2014, applying the double-extension method to a LIFO pool consisting of 25,500 units of...

Q: Oasis Company has used the dollar-value LIFO method for inventory

Oasis Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Oasis’ records. Instructions Calculate the ind...

Q: The dollar-value LIFO method was adopted by Enya Corp.

The dollar-value LIFO method was adopted by Enya Corp. on January 1, 2014. Its inventory on that date was $160,000. On December 31, 2014, the inventory at prices existing on that date amounted to $1...

Q: Presented below is information related to Dino Radja Company./

Presented below is information related to Dino Radja Company. Instructions Compute the ending inventory for Dino Radja Company for 2011 through 2016 using the dollar-value LIFO method.  ...

Q: The following information relates to the Jimmy Johnson Company./

The following information relates to the Jimmy Johnson Company. Instructions Use the dollar-value LIFO method to compute the ending inventory for Johnson Company for 2010 through 2014.  ...

Q: As compared with the FIFO method of costing inventories, does the

As compared with the FIFO method of costing inventories, does the LIFO method result in a larger or smaller net income in a period of rising prices? What is the comparative effect on net income in a...

Q: In January 2014, Susquehanna Inc. requested and secured permission from

In January 2014, Susquehanna Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in, first-out (LIFO) method and elected...

Q: Jane Yoakam, president of Estefan Co., recently read an article

Jane Yoakam, president of Estefan Co., recently read an article that claimed that at least 100 of the country’s largest 500 companies were either adopting or considering adopting the last-in,...

Q: Prepare a memorandum containing responses to the following items.(

Prepare a memorandum containing responses to the following items. (a) Describe the cost flow assumptions used in average-cost, FIFO, and LIFO methods of inventory valuation. (b) Distinguish betwee...

Q: Geddes Corporation is a medium-sized manufacturing company with two divisions

Geddes Corporation is a medium-sized manufacturing company with two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the auto...

Q: Arruza Co. is considering switching from the specific-goods LIFO

Arruza Co. is considering switching from the specific-goods LIFO approach to the dollar-value LIFO approach. Because the financial personnel at Arruza know very little about dollar-value LIFO, they...

Q: Wilkens Company uses the LIFO method for inventory costing. In an

Wilkens Company uses the LIFO method for inventory costing. In an effort to lower net income, company president Mike Wilkens tells the plant accountant to take the unusual step of recommending to th...

Q: What is the dollar-value method of LIFO inventory valuation?

What is the dollar-value method of LIFO inventory valuation? What advantage does the dollar-value method have over the specific goods approach of LIFO inventory valuation? Why will the traditional...

Q: Explain the following terms.(a) LIFO layer.

Explain the following terms. (a) LIFO layer. (b) LIFO reserve. (c) LIFO effect.  

Q: On December 31, 2013, the inventory of Powhattan Company amounts

On December 31, 2013, the inventory of Powhattan Company amounts to $800,000. During 2014, the company decides to use the dollar-value LIFO method of costing inventories. On December 31, 2014, the i...

Q: In an article that appeared in the Wall Street Journal, the

In an article that appeared in the Wall Street Journal, the phrases “phantom (paper) profits” and “high LIFO profits” through involuntary liquidation were used. Explain these...

Q: Dierdorf Inc., a closely held corporation, has decided to go

Dierdorf Inc., a closely held corporation, has decided to go public. The controller, Ed Floyd, is concerned with presenting interim data when a LIFO inventory valuation is used. What problems are enco...

Q: Holder-Webb Company began operations on January 1, 2012,

Holder-Webb Company began operations on January 1, 2012, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2015. The following inform...

Q: Taveras Co. decides at the beginning of 2014 to adopt the

Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2012, and had m...

Q: Presented below are income statements prepared on a LIFO and FIFO basis

Presented below are income statements prepared on a LIFO and FIFO basis for Kenseth Company, which started operations on January 1, 2013. The company presently uses the LIFO method of pricing its inve...

Q: Listed below are various types of accounting changes and errors.

Listed below are various types of accounting changes and errors. ______ 1. Change in a plant asset’s salvage value. ______ 2. Change due to overstatement of inventory. ______ 3. Change from sum-of-the...

Q: Below is the net income of Anita Ferreri Instrument Co., a

Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. Instructions (Ignore tax considerations.) (a) Assum...

Q: State how each of the following items is reflected in the financial

State how each of the following items is reflected in the financial statements. (a) Change from FIFO to LIFO method for inventory valuation purposes. (b) Charge for failure to record depreciation in a...

Q: Botticelli Inc. was organized in late 2012 to manufacture and sell

Botticelli Inc. was organized in late 2012 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported n...

Q: The management of Utrillo Instrument Company had concluded, with the concurrence

The management of Utrillo Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Utrillo changed its method of...

Q: Indicate how the following items are recorded in the accounting records in

Indicate how the following items are recorded in the accounting records in the current year of Coronet Co. (a) Impairment of goodwill. (b) A change in depreciating plant assets from accelerated to the...

Q: Discuss how a change to the LIFO method of inventory valuation is

Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable to determine previous LIFO inventory amounts.

Q: Mathys Inc. has recently hired a new independent auditor, Karen

Mathys Inc. has recently hired a new independent auditor, Karen Ogleby, who says she wants “to get everything straightened out.” Consequently, she has proposed the following accounting changes in conn...

Q: Various types of accounting changes can affect the financial statements of a

Various types of accounting changes can affect the financial statements of a business enterprise differently. Assume that the following list describes changes that have a material effect on the financ...

Q: Various types of "accounting changes" can affect the second reporting

Various types of "accounting changes" can affect the second reporting standard of the generally accepted auditing standards. This standard reads, "The auditor must identify in the auditor's report tho...

Q: The following questions concern sampling for attributes. Choose the best

The following questions concern sampling for attributes. Choose the best response. a. An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor (...

Q: Benson Company was franchised on January 1, 2011. At the

Benson Company was franchised on January 1, 2011. At the end of its third year of operations, December 31, 2013, management requested a study to determine what effect different materials inventory cos...

Q: The purchases and issues of rubber gaskets (Materials Ledger #11216

The purchases and issues of rubber gaskets (Materials Ledger #11216) as shown in the records of HD Corporation for the month of November follow: Required: 1. Complete a materials ledger account simil...

Q: Why do companies adopt the LIFO method of inventory costing? Your

Why do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on both the income statement and balance sheet.

Q: Explain why proponents of LIFO argue that it provides a better match

Explain why proponents of LIFO argue that it provides a better match of revenue and expenses. In what situation would it not provide a better match?

Q: On January 1, 2018, Sanderson Variety Store adopted the dollar

On January 1, 2018, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records provided the following information: Estimate ending inventory using the dollar-v...

Q: This exercise is a continuation of BE 9–11. During

This exercise is a continuation of BE 9–11. During 2019, purchases at cost and retail were $168,000 and $301,000, respectively. Net markups, net markdowns, and net sales for the year...

Q: Esquire Inc. uses the LIFO method to value its inventory.

Esquire Inc. uses the LIFO method to value its inventory. Inventory at January 1, 2018, was $500,000 (20,000 units at $25 each). During 2018, 80,000 units were purchased, all at the same price of $30...

Q: Adams Corporation uses a periodic inventory system and the retail inventory method

Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September 2018...

Q: Refer to the situation described in BE 8–8. Assuming

Refer to the situation described in BE 8–8. Assuming an income tax rate of 40%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial st...

Q: On January 1, 2018, the Brunswick Hat Company adopted the

On January 1, 2018, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2018: Required: Calculate the estimated ending inventory and cost of g...

Q: Walgreens Boots Alliance, Inc. reported inventories of $8,

Walgreens Boots Alliance, Inc. reported inventories of $8,678 million and $6,076 million in its August 31, 2015, and August 31, 2014, balance sheets, respectively. Cost of goods sold for the year ende...

Q: Canova Corporation adopted the dollar-value LIFO retail method on January

Canova Corporation adopted the dollar-value LIFO retail method on January 1, 2018. On that date, the cost of the inventory on hand was $15,000 and its retail value was $18,750. Information for 2018 an...

Q: Lance-Hefner Specialty Shoppes decided to use the dollar-value

Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information: Related retail price indexes are as fo...

Q: At the beginning of 2018, a company adopts the dollar-

At the beginning of 2018, a company adopts the dollar-value LIFO inventory method for its one inventory pool. The pool’s value on that date was $1,400,000. The 2018 ending inventory valued at year-end...

Q: Bosco Company adopted the dollar-value LIFO retail method at the

Bosco Company adopted the dollar-value LIFO retail method at the beginning of 2018. Information for 2018 and 2019 is as follows, with certain data intentionally omitted: Required: Determine the miss...

Q: The Churchill Corporation uses a periodic inventory system and the LIFO inventory

The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 20,000 units consisted of the following, listed in chronologic...

Q: Identify two advantages of dollar-value LIFO compared with unit LIFO

Identify two advantages of dollar-value LIFO compared with unit LIFO.

Q: Crosby Company owns a chain of hardware stores throughout the state.

Crosby Company owns a chain of hardware stores throughout the state. The company uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. T...

Q: Kingston Company uses the dollar-value LIFO method of computing inventory

Kingston Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2018, wi...

Q: On January 1, 2018, Avondale Lumber adopted the dollar-

On January 1, 2018, Avondale Lumber adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $260,000. An internally generated cost index is used...

Q: At the beginning of 2018, Quentin and Kopps (Q&

At the beginning of 2018, Quentin and Kopps (Q&K) adopted the dollar-value LIFO (DVL) inventory method. On that date the value of its one inventory pool was $84,000. The company uses an internally...

Q: Johnson Corporation began 2018 with inventory of 10,000 units of

Johnson Corporation began 2018 with inventory of 10,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system and the LIFO cost method. The following transact...

Q: Carlson Auto Dealers Inc. sells a handmade automobile as its only

Carlson Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2018, Carlson...

Q: Caterpillar, Inc., is one of the world’s largest manufacturers of

Caterpillar, Inc., is one of the world’s largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the company’s 2015 financial statements: D....

Q: Taylor Corporation has used a periodic inventory system and the LIFO cost

Taylor Corporation has used a periodic inventory system and the LIFO cost method since its inception in 2011. The company began 2018 with the following inventory layers (listed in chronological order...

Q: Cansela Corporation uses a periodic inventory system and the LIFO method to

Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2018 with inventory of 4,500 units of its only product. The beginning inventory balan...

Q: You have just been hired as a consultant to Tangier Industries,

You have just been hired as a consultant to Tangier Industries, a newly formed company. The company president, John Meeks, is seeking your advice as to the appropriate inventory method Tangier should...

Q: An accounting intern for a local CPA firm was reviewing the financial

An accounting intern for a local CPA firm was reviewing the financial statements of a client in the electronics industry. The intern noticed that the client used the FIFO method of determining ending...

Q: In 2017 the Moncrief Company purchased from Jim Lester the right to

In 2017 the Moncrief Company purchased from Jim Lester the right to be the sole distributor in the western states of a product called Zelenex. In payment, Moncrief agreed to pay Lester 20% of the gros...

Q: Income statement and balance sheet information abstracted from a recent annual report

Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Inc. appears below: The significant accounting policies note disclosure contained the f...

Q: Maxi Corporation uses the unit LIFO inventory method. The costs of

Maxi Corporation uses the unit LIFO inventory method. The costs of the company’s products have been steadily rising since the company began operations in 2008 and cost increases are expected to contin...

Q: The Austin Company uses the dollar-value LIFO inventory method with

The Austin Company uses the dollar-value LIFO inventory method with internally developed price indexes. Assume that ending inventory at year-end cost has been determined. Outline the remaining steps u...

Q: Explain the difference between the retail inventory method using LIFO and the

Explain the difference between the retail inventory method using LIFO and the dollar-value LIFO retail method.

Q: When a company changes its inventory method to LIFO, an exception

When a company changes its inventory method to LIFO, an exception is made for the way accounting changes usually are reported. Explain the difference in the accounting treatment of a change to the LIF...

Q: AAA Hardware uses the LIFO method to value its inventory. Inventory

AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 10,000 units of the company’s one product. These units cost $15 each. During the year, 60,...

Q: Explain the LIFO retail inventory method.

Explain the LIFO retail inventory method.

Q: Alquist Company uses the retail method to estimate its ending inventory.

Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2018 operations is as follows: a. January 1, 2018, beginning inventory had a cost of $100,0...

Q: Generally accepted accounting principles should be applied consistently from period to period

Generally accepted accounting principles should be applied consistently from period to period. However, changes within a company, as well as changes in the external economic environment, may force a c...

Q: Fred’s Inc. operates general merchandise retail discount stores and full-

Fred’s Inc. operates general merchandise retail discount stores and full-service pharmacies in the Southeastern United States. Access the company’s 10-K for the fiscal year ended January 30, 2016. You...

Q: Mayfair Department Stores, Inc., operates over 30 retail stores in

Mayfair Department Stores, Inc., operates over 30 retail stores in the Pacific Northwest. Prior to 2018, the company used the FIFO method to value its inventory. In 2018, Mayfair decided to switch to...

Q: Huddell Company, which is both a wholesaler and retailer, purchases

Huddell Company, which is both a wholesaler and retailer, purchases merchandise from various suppliers. The dollar-value LIFO method is used for the wholesale inventories. Huddell determines the estim...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended January 30, 2016, are available in Connect. This mate...

Q: Alta Ski Company’s inventory records contained the following information regarding its latest

Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2018 ……………… 600 u...

Q: What is a LIFO inventory pool? How the cost of ending

What is a LIFO inventory pool? How the cost of ending inventory is determined when pools are used?

Q: Listed below are several terms and phrases associated with inventory measurement.

Listed below are several terms and phrases associated with inventory measurement. Pair each item from List A with the item from List B (by letter) that is most appropriately associated with it.

Q: Causwell Company began 2018 with 10,000 units of inventory on

Causwell Company began 2018 with 10,000 units of inventory on hand. The cost of each unit was $5.00. During 2018 an additional 30,000 units were purchased at a single unit cost, and 20,000 units remai...

Q: Smith-Kline Company maintains inventory records at selling prices as well

Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2018, the records indicate the following data: Required: Assuming the price level increased from 1.00 at Jan...

Q: AEP Industries Inc. is a leading manufacturer of plastic packing films

AEP Industries Inc. is a leading manufacturer of plastic packing films. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following d...

Q: The Reuschel Company began 2018 with inventory of 10,000 units

The Reuschel Company began 2018 with inventory of 10,000 units at a cost of $7 per unit. During 2018, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000...

Q: On January 1, 2018, the Haskins Company adopted the dollar

On January 1, 2018, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool. The pool’s value on this date was $660,000. The 2018 and 2019 ending inventory valued at year-e...

Q: Mercury Company has only one inventory pool. On December 31,

Mercury Company has only one inventory pool. On December 31, 2018, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $200,000. I...

Q: Listed below are several terms and phrases associated with inventory measurement.

Listed below are several terms and phrases associated with inventory measurement. Pair each item from List A with the item from List B (by letter) that is most appropriately associated with it.

Q: On January 1, 2018, HGC Camera Store adopted the dollar

On January 1, 2018, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2018 and 2019 are as follows: Require...

Q: In 2018, Hopyard Lumber changed its inventory method from LIFO to

In 2018, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2017 of $127,000 would have been $145,000 if FIFO had been used. Inventory at the end of 2018 is $162,00...

Q: Raleigh Department Store uses the conventional retail method for the year ended

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2016. Available information follows: a. The inventory at January 1, 2016, had a retail value of $45,000 and...

Q: The FASB Accounting Standards Codification represents the single source of authoritative U

The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 1. What is the specific citation that describes the d...

Q: Cast Iron Grills, Inc., manufactures premium gas barbecue grills.

Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company uses a periodic inventory system and the LIFO cost method for its grill inventory. Cast Iron’s December 31, 2018, fiscal y...

Q: On January 1, 2018, Pet Friendly Stores adopted the retail

On January 1, 2018, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2018 and 2019 are as follows: Required: 1. Estimate...

Q: Inverness Steel Corporation is a producer of flat-rolled carbon,

Inverness Steel Corporation is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products. The company’s income statement for the 2018 fiscal year report...

Q: Carswell Electronics adopted the dollar-value LIFO method on January 1

Carswell Electronics adopted the dollar-value LIFO method on January 1, 2018, when the inventory value of its one inventory pool was $720,000. The company decided to use an external index, the Consume...

Q: On January 1, 2018, the Taylor Company adopted the dollar

On January 1, 2018, the Taylor Company adopted the dollar-value LIFO method. The inventory value for its one inventory pool on this date was $400,000. Inventory data for 2018 through 2020 are as follo...

Q: The balance sheet and disclosure of significant accounting policies taken from the

The balance sheet and disclosure of significant accounting policies taken from the 2016 annual report of Wal- Mart Stores, Inc., appear below. Use this information to answer the following questions: 1...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2004 by two talented engineers with little business training. In 2018, the company was acquired by one of its...

Q: Southeast Steel, Inc., changed from the FIFO inventory costing method

Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2017. How would this change likely be reported in the 2018 comparative financial statements?

Q: In 2018, J J Dishes changed its method of valuing inventory

In 2018, J J Dishes changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2017, J J’s inventories were $96 million (FIFO). J J’s records were insufficient to...

Q: Flay Foods has always used the FIFO inventory costing method for both

Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2018, Flay decided to change to the LIFO method. As a result of the chan...

Q: Wolfgang Kitchens has always used the FIFO inventory costing method for both

Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2018, Wolfgang decided to change to the LIFO method. Net income i...

Q: Indicate with the appropriate letter the nature of each situation described below

Indicate with the appropriate letter the nature of each situation described below: Type of Change PR ……………………. Change in principle reported retrospectively PP …………..………… Change in principle reported p...

Q: Indicate with the appropriate letter the nature of each adjustment described below

Indicate with the appropriate letter the nature of each adjustment described below: Type of Adjustment A. Change in accounting principle (reported retrospectively) B. Change in accounting principle (e...

Q: Aquatic Equipment Corporation decided to switch from the LIFO method of costing

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2018. The inventory as reported at the end of 2017 using LIFO would h...

Q: Described below are six independent and unrelated situations involving accounting changes.

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2018 before any adjusting entries or closing entries were prepared. Assume the tax...

Q: At the beginning of 2018, Wagner Implements undertook a variety of

At the beginning of 2018, Wagner Implements undertook a variety of changes in accounting methods, corrected several errors, and instituted new accounting policies. Required: Indicate for each item 1...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its...

Q: The Pyramid Company has used the LIFO method of accounting for inventory

The Pyramid Company has used the LIFO method of accounting for inventory during its first two years of operation, 2016 and 2017. At the beginning of 2018, Pyramid decided to change to the average cost...

Q: Shown below are net income amounts as they would be determined by

Shown below are net income amounts as they would be determined by Weihrich Steel Company by each of three different inventory costing methods ($ in thousands). Required: 1. Assume that Weihrich used...

Q: Fantasy Fashions had used the LIFO method of costing inventories, but

Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have...

Q: Ray Solutions decided to make the following changes in its accounting policies

Ray Solutions decided to make the following changes in its accounting policies on January 1, 2018: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service co...

Q: Webster Products, Inc., adopted the dollar-value LIFO method

Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2018. Webster continues to use the FIFO method for inte...

Q: Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest

Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest. Prior to 2018, the company used the FIFO method to value its inventory. In 2018, Mayfair decided to switch to the dol...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended January 30, 2016, are available in Connect. This mate...

Q: Bryan followed in his father’s footsteps and entered into the carpet business

Bryan followed in his father’s footsteps and entered into the carpet business. He owns and operates I Do Carpet (IDC). Bryan prefers to install carpet only, but in order to earn addi...

Q: Suppose that David adopted the last-in first-out (

Suppose that David adopted the last-in first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase prices below). In late December, David sold widget #2 and next year David...

Q: Cool Touch Cookware (CTC) has been in business for about

Cool Touch Cookware (CTC) has been in business for about 10 years now. Dawn and Linda are each 50 percent owners of the business. They initially established the business with cash contributions. CTC m...

Q: ATW corporation currently uses the FIFO method of accounting for its inventory

ATW corporation currently uses the FIFO method of accounting for its inventory for book and tax purposes. Its beginning inventory for the current year was $8,000,000. Its ending inventory for the curr...

Q: Is the LIFO recapture tax a C corporation tax or an S

Is the LIFO recapture tax a C corporation tax or an S corporation tax? Explain.

Q: Until the end of year 0, Magic Carpets (MC)

Until the end of year 0, Magic Carpets (MC) was a C corporation with a calendar year. At the beginning of year 1 it elected to be taxed as an S corporation. MC uses the LIFO method to value its invent...

Q: Barry Potter and Winnie Weasley are considering making an S election on

Barry Potter and Winnie Weasley are considering making an S election on March 1, 2017, for their C corporation, Omniocular. However, first they want to consider the implications of the following infor...

Q: Assume that a firm separately determined inventory under FIFO and LIFO and

Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. a. In each space that follows, place the correct sign [less than (), or equal (=)] for each compar...

Q: Beginning inventory, purchases, and sales data for prepaid cell phones

Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost...

Q: The beginning inventory for Midnight Supplies and data on purchases and sales

The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A. In Problem 7-1A The beginning inventory at Midnight Supplies and data...

Q: Golden Eagle Company began operations on April 1 by selling a single

Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: April …â€&brvb...

Q: Assume that a firm separately determined inventory under FIFO and LIFO and

Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. a. In each space that follows, place the correct sign [less than (), or equal (=)] for each compar...

Q: Beginning inventory, purchases, and sales data for prepaid cell phones

Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost...

Q: Golden Eagle Company began operations on April 1 by selling a single

Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: April …â€&brvb...

Q: Duracraft Corporation is nearing the end of its first year of operations

Duracraft Corporation is nearing the end of its first year of operations. Duracraft made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units for $1,200,00...

Q: Camp Surplus began May with 67 tents that cost $25 each

Camp Surplus began May with 67 tents that cost $25 each. During the month, Camp Surplus made the following purchases at cost: May 6 ………………… 101 tents @ $27 = $2,727 18 ……………………….. 163 tents @ $29 = 4,...

Q: The records of Shepard Aviation include the following accounts for inventory of

The records of Shepard Aviation include the following accounts for inventory of aviation fuel at October 31 of the current year: Requirements 1. Prepare a partial income statement through gross prof...

Q: During 2012, Vanguard, Inc., changed to the LIFO method

During 2012, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that during 2013, Vanguard changes back to the FIFO method and the following year Vanguard switches back to...

Q: For each of the following situations, identify the inventory method that

For each of the following situations, identify the inventory method that you would use; or, given the use of a particular method, state the strategy that you would follow to accomplish your goal: a. I...

Q: Tolbert Trumpet Company is nearing the end of its worst year ever

Tolbert Trumpet Company is nearing the end of its worst year ever. With two weeks until year-end, it appears that net income for the year will have decreased by 30% from last year. Jim Tolbert, the pr...

Q: Army-Navy Surplus began March with 75 tents that cost $

Army-Navy Surplus began March with 75 tents that cost $16 each. During the month, Army-Navy Surplus made the following purchases at cost: Mar 3 ………………… 95 tents @ $18 = $1,710 17 ………..…………… 165 tents...

Q: The records of Lindbergh Aviation include the following accounts for inventory of

The records of Lindbergh Aviation include the following accounts for inventory of aviation fuel at July 31 of the current year: Requirements 1. Prepare a partial income statement through gross profi...

Q: Determine whether each of the following actions in buying, selling,

Determine whether each of the following actions in buying, selling, and accounting for inventories is ethical or unethical. Give your reason for each answer. 1. In applying the lower-of-cost-or-market...

Q: Suppose In Style Fashions, a specialty retailer, had these records

Suppose In Style Fashions, a specialty retailer, had these records for ladies’ evening gowns during 2012. Beginning inventory (44 @ $975)....................... $ 42,900 Purchase in February (19 @ $1,...

Q: Use the data for Ontario, Inc., in Exercise 6-

Use the data for Ontario, Inc., in Exercise 6-16A to illustrate Ontario, Inc.’s income tax advantage from using LIFO over FIFO. Sales revenue is $9,000, operating expenses are $1,400...

Q: Suppose a Corse store in Kansas City, Missouri, ended May

Suppose a Corse store in Kansas City, Missouri, ended May 2012 with 700,000 units of merchandise that cost an average of $6 each. Suppose the store then sold 650,000 units for $8,450,000 during June....

Q: Burner & Brett, a partnership, had the following inventory data

Burner & Brett, a partnership, had the following inventory data: Burner & Brett need to know the company’s gross profit percentage and rate of inventory turnover for 2012 u...

Q: Use the data for Donovan, Inc., in Exercise 6-

Use the data for Donovan, Inc., in Exercise 6-29B to illustrate Donovan’s income tax advantage from using LIFO over FIFO. Sales revenue is $9,200, operating expenses are $1,800, and...

Q: Arnold Financial Management believes that the biotechnology industry is a good investment

Arnold Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, HeartStart, Inc., uses the FIFO me...

Q: Suppose a Robak store in Denver, Colorado, ended September 2012

Suppose a Robak store in Denver, Colorado, ended September 2012 with 1,000,000 units of merchandise that cost an average of $7.00 each. Suppose the store then sold 950,000 units for $9,500,000 during...

Q: Jonah’s Copy Center uses laser printers. Assume Jonah started the year

Jonah’s Copy Center uses laser printers. Assume Jonah started the year with 100 containers of ink (average cost of $9.50 each, FIFO cost of $8.40 each, LIFO cost of $8.10 each). During the year, Jonah...

Q: Macrovision.com uses the LIFO method to account for inventory.

Macrovision.com uses the LIFO method to account for inventory. Macrovision is having an unusually good year, with net income well above expectations. The company’s inventory costs are rising rapidly....

Q: Tilton & Taft, a partnership, had these inventory data:

Tilton & Taft, a partnership, had these inventory data: Tilton & Taft need to know the company’s gross profit percentage and rate of inventory turnover for 2012 under 1. FI...

Q: This exercise should be used in conjunction with Short Exercise 6-

This exercise should be used in conjunction with Short Exercise 6-4. Jonah is a corporation subject to a 40% income tax. Compute Jonah’s income tax expense under the average, FIFO, and LIFO inventory...

Q: For each of the following situations, indicate the type of opinion

For each of the following situations, indicate the type of opinion(s) that auditors could issue (more than one opinion may be appropriate in each circumstance). Unless otherwise noted, assume that no...

Q: In December of the current year, Williams Company changed its method

In December of the current year, Williams Company changed its method of accounting for inventory and cost of goods sold from LIFO to FIFO. The account balances shown in the trial balance have already...

Q: At the end of January, Higgins Data Systems had an inventory

At the end of January, Higgins Data Systems had an inventory of 600 units, which cost $16 per unit to produce. During February the company produced 850 units at a cost of $19 per unit. If the firm sol...

Q: At the end of January, Mineral Labs had an inventory of

At the end of January, Mineral Labs had an inventory of 725 units, which cost $10 per unit to produce. During February the company produced 650 units at a cost of $14 per unit. If the firm sold 1,000...

Q: Assume in Problem 14 that the Bradley Corporation used LIFO accounting instead

Assume in Problem 14 that the Bradley Corporation used LIFO accounting instead of FIFO; what would its gross profit be? What would be the value of ending inventory? Data from Problem 14: The Bradley...

Q: Sprint Shoes, Inc., had a beginning inventory of 9,

Sprint Shoes, Inc., had a beginning inventory of 9,000 units on January 1, 2010. The costs associated with the inventory were: During 2010, the firm produced 42,500 units with the following costs: S...

Q: With inflation, what are the implications of using LIFO and FIFO

With inflation, what are the implications of using LIFO and FIFO inventory methods? How do they affect the cost of goods sold?

Q: Chapter 3 discusses financial reporting and accounting measurements under International Financial Reporting

Chapter 3 discusses financial reporting and accounting measurements under International Financial Reporting Standards (IFRS). Chapter 4 discusses the same issues for U.S. GAAP and Exhibit 4-2 summariz...

Q: Marissa Skye and Alexa Reichele, tire analysts for a global investment

Marissa Skye and Alexa Reichele, tire analysts for a global investment fund located in Manhattan, are examining the 20X0 earnings performance of two potential investment candidates. Reflecting the com...

Q: Read Appendix 9-1. Referring to Exhibit 9-14

Read Appendix 9-1. Referring to Exhibit 9-14 and related notes, assume instead that Toyoza’s inventories were costed using the FIFO method and that Lincoln Enterprises employed the L...

Q: To Exhibit 3-6. / Required

To Exhibit 3-6. Required: Which country’s GAAP appears to be the most oriented toward equity investors? Which country’s GAAP appears to be the least oriented tow...

Q: To Exhibit 4-5. / Required

To Exhibit 4-5. Required: Which country’s GAAP appears to be the most oriented toward equity investors? Which country’s GAAP appears to be the least oriented tow...

Q: The following describes Chinese accounting in the late 1990s: Financial

The following describes Chinese accounting in the late 1990s: Financial statements consist of the balance sheet, income statement, statement of changes in financial position (or cash flow statement),...

Q: The following are financial ratios used by analysts: • Liquidity

The following are financial ratios used by analysts: • Liquidity: current ratio; cash flow from operations to current liabilities • Solvency: debt to equity; debt t...

Q: Assume the company does not expect to replace the units of beginning

Assume the company does not expect to replace the units of beginning inventory sold; it plans to reduce inventory by year-end to 500 units. What amount of cost of goods sold should be recorded for the...

Q: Assume the company expects to replace the units of beginning inventory sold

Assume the company expects to replace the units of beginning inventory sold in April at a cost of $45 per unit and expects inventory at year-end to be between 2,100 and 2,500 units. What amount of cos...

Q: Cambi Company began operations on January 1, 2016. In the

Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company’...

Q: How should a company handle a LIFO liquidation in an interim period

How should a company handle a LIFO liquidation in an interim period when the liquidated inventory is expected to be replaced by year-end?

Q: Income is to be evaluated under four different situations as follows:

Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIF...

Q: A recent press release for Seneca Foods (licensee of the Libby’s

A recent press release for Seneca Foods (licensee of the Libby’s brand of canned fruits and vegetables) included the following information: The current year’s net earnings were $8,019,000 or $0.65 pe...

Q: In its annual report, Caterpillar, Inc., a major manufacturer

In its annual report, Caterpillar, Inc., a major manufacturer of farm and construction equipment, reported the following information concerning its inventories: Inventories are stated at the lower of...

Q: Daniel Company uses a periodic inventory system. Data for 2012:

Daniel Company uses a periodic inventory system. Data for 2012: beginning merchandise inventory (December 31, 2011), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes...

Q: Following is partial information for the income statement of Lumber Company under

Following is partial information for the income statement of Lumber Company under three different inventory costing methods, assuming the use of a periodic inventory system: Required: 1. Compute co...

Q: The records at the end of January 2012 for Captain Company showed

The records at the end of January 2012 for Captain Company showed the following for a particular kind of merchandise: Inventory, December 31, 2011, at FIFO: 19 Units @ $16 = $304 Inventory, December...

Q: The following note was contained in a recent Ford Motor Company annual

The following note was contained in a recent Ford Motor Company annual report: Required: 1. What amount of ending inventory would have been reported in the current year if Ford had used only FIFO?...

Q: An annual report of ConocoPhillips contained the following note: During

An annual report of ConocoPhillips contained the following note: During 2008, certain international inventory quantity reductions caused a liquidation of LIFO inventory values resulting in a $39 milli...

Q: Indicate whether the FIFO or LIFO inventory costing method normally produces each

Indicate whether the FIFO or LIFO inventory costing method normally produces each of the following effects under the listed circumstances. a. Declining costs Highest net income ______ Highest inven...

Q: Indicate whether the FIFO or LIFO inventory costing method would normally be

Indicate whether the FIFO or LIFO inventory costing method would normally be selected when inventory costs are rising. Explain why.

Q: Consider the following information: beginning inventory 20 units @ $20

Consider the following information: beginning inventory 20 units @ $20 per unit; first purchase 35 units @ $22 per unit; second purchase 40 units @ $24 per unit; 50 units were sold. What is cost of go...

Q: Atlantic Company sells electronic test equipment that it acquires from a foreign

Atlantic Company sells electronic test equipment that it acquires from a foreign source. During the year 2011, the inventory records reflected the following: Inventory is valued at cost using the LI...

Q: Income is to be evaluated under four different situations as follows:

Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: F...

Q: An annual report for General Motors Corporation included the following note:

An annual report for General Motors Corporation included the following note: Inventories are stated generally at cost, which is not in excess of market. The cost of substantially all domestic inventor...

Q: In a recent annual report, General Electric reported the following in

In a recent annual report, General Electric reported the following in its inventory note: It also reported a $23 million change in cost of goods sold due to “lower inventory levels...

Q: Contrast the effects of LIFO versus FIFO on reported assets (i

Contrast the effects of LIFO versus FIFO on reported assets (i.e., the ending inventory) when (a) prices are rising and (b) prices are falling.

Q: Contrast the income statement effect of LIFO versus FIFO (i.

Contrast the income statement effect of LIFO versus FIFO (i.e., on pretax income) when (a) prices are rising and (b) prices are falling.

Q: Contrast the effects of LIFO versus FIFO on cash outflow and inflow

Contrast the effects of LIFO versus FIFO on cash outflow and inflow.

Q: Complete the requirements for each of the following independent cases:

Complete the requirements for each of the following independent cases: Case A. Dr Pepper Snapple Group, Inc., is a leading integrated brand owner, bottler, and distributor of nonalcoholic beverages i...

Q: A large manufacturer of truck and car tires recently changed its cost

A large manufacturer of truck and car tires recently changed its cost flow assumption method for inventories at the beginning of 2014. The manufacturer has been in operation for almost 40 years, and f...

Q: What is a LIFO layer liquidation? How does it affect the

What is a LIFO layer liquidation? How does it affect the prediction of future earnings?

Q: The weighted-average cost-flow assumption is a common technique

The weighted-average cost-flow assumption is a common technique used to value inventory and determine cost of goods sold. It falls between LIFO and FIFO as to the differential effect on inventory and...

Q: Super Mart, a regional convenience store chain, maintains milk inventory

Super Mart, a regional convenience store chain, maintains milk inventory by the gallon. The first month’s milk purchases and sales at its Freeport, Florida, location follow: Requir...

Q: Golf Unlimited carries an inventory of putters and other golf clubs.

Golf Unlimited carries an inventory of putters and other golf clubs. The sales price of each putter is $119. Company records indicate the following for a particular line of Golf Unlimitedâ€...

Q: Assume that Toys Galore store bought and sold a line of dolls

Assume that Toys Galore store bought and sold a line of dolls during December as follows: Requirements: 1. Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit usin...

Q: Assume that AB Tire Store completed the following perpetual inventory transactions for

Assume that AB Tire Store completed the following perpetual inventory transactions for a line of tires: Requirements: 1. Compute cost of goods sold and gross profit using the FIFO inventory costing...

Q: Assume that Jump Coffee Shop completed the following periodic inventory transactions for

Assume that Jump Coffee Shop completed the following periodic inventory transactions for a line of merchandise inventory: Requirements: 1. Compute ending merchandise inventory, cost of goods sold, a...

Q: Fit Gym began January with merchandise inventory of 78 crates of vitamins

Fit Gym began January with merchandise inventory of 78 crates of vitamins that cost a total of $4,290. During the month, Fit Gym purchased and sold merchandise on account as follows: Requirements: 1...

Q: Steel Mill began August with 50 units of iron inventory that cost

Steel Mill began August with 50 units of iron inventory that cost $35 each. During August, the company completed the following inventory transactions: Requirements: 1. Prepare a perpetual inventory...

Q: Exercise World began January with merchandise inventory of 90 crates of vitamins

Exercise World began January with merchandise inventory of 90 crates of vitamins that cost a total of $5,850. During the month, Exercise World purchased and sold merchandise on account as follows: R...

Q: Steel It began January with 55 units of iron inventory that cost

Steel It began January with 55 units of iron inventory that cost $35 each. During January, the company completed the following inventory transactions: Requirements: 1. Prepare a perpetual inventory...

Q: Boston Cycles started October with 12 bicycles that cost $42 each

Boston Cycles started October with 12 bicycles that cost $42 each. On October 16, Boston bought 40 bicycles at $68 each. On October 31, Boston sold 34 bicycles for $100 each. Requirements: 1. Prepare...

Q: The periodic inventory records of Flexon Prosthetics indicate the following for the

The periodic inventory records of Flexon Prosthetics indicate the following for the month of July: At July 31, Flexon counts four units of merchandise inventory on hand. Compute ending merchandise...

Q: The introduction to this chapter suggests that the chapter will explore the

The introduction to this chapter suggests that the chapter will explore the answers to some questions about inventory. Did you get the answers to those questions? Specifically, a. why does inventory n...

Q: Youngstown Corporation is considering changing its inventory method from FIFO to LIFO

Youngstown Corporation is considering changing its inventory method from FIFO to LIFO and wants to determine the impact on selected accounting ratios. In general, what impact would you expect on the f...

Q: Company A uses the FIFO method to cost inventory, and Company

Company A uses the FIFO method to cost inventory, and Company B uses the LIFO method. The two companies are exactly alike except for the difference in inventory costing methods. Costs of inventory ite...

Q: Sparrow Corporation (a calendar year, accrual basis taxpayer) had

Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2017, its second year of operation. Taxable income………………………………………………………………………………..…..$330,000 Federal i...

Q: For each of the following independent statements, indicate whether the transaction

For each of the following independent statements, indicate whether the transaction will increase (+), decrease (─), or have no effect (NE) on the basis of a shareholder’s stock in an S corporation. a....

Q: For each of the following items considered independently, indicate whether the

For each of the following items considered independently, indicate whether the circumstances call for an addition modification (A), a subtraction modification (S), or no modification (N) in computing...

Q: How would reported income differ if LIFO rather than FIFO were used

How would reported income differ if LIFO rather than FIFO were used when purchase prices are rising? When purchase prices are falling?

Q: How would the balance sheet accounts be affected if LIFO rather than

How would the balance sheet accounts be affected if LIFO rather than FIFO were used when purchase prices are rising? When purchase prices are falling?

Q: What is the LIFO reserve, and when is it used?

What is the LIFO reserve, and when is it used?

Q: Refer to the information for Morgan Inc. below. If Morgan

Refer to the information for Morgan Inc. below. If Morgan uses a perpetual inventory system, what is the cost of goods sold under LIFO at April 30? a. $37,500 b. $38,400 c. $63,600 d. $64,500

Q: When purchase prices are rising, which of the following statements is

When purchase prices are rising, which of the following statements is true? a. LIFO produces a higher cost of goods sold than FIFO. b. LIFO produces a higher cost for ending inventory than FIFO. c. FI...

Q: Refer to the information for Morgan Inc. above. If Morgan

Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of ending inventory under LIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200

Q: 1. Interim reporting under FASB ASC Topic 270 guidelines refers to

1. Interim reporting under FASB ASC Topic 270 guidelines refers to financial reporting: a On a monthly basis b On a quarterly basis c On a regular basis d For periods less than a year 2. A liquidatio...

Q: Tap Manufacturing Company records sales of $1,000,000

Tap Manufacturing Company records sales of $1,000,000 and cost of sales of $550,000 during the first quarter of 2016. Tap uses the LIFO inventory method, and its inventories are computed as follows:...

Q: We have discussed two methods for process costing, weighted average and

We have discussed two methods for process costing, weighted average and FIFO. Your colleague recommends last-in, first-out (LIFO) process costing to the controller as a new system. The controller is c...

Q: Ball Corporation’s owners recently offered to sell 100 percent of their ownership

Ball Corporation’s owners recently offered to sell 100 percent of their ownership to Timber Corporation for $450,000. Timber’s business manager was told that Ball’s book value was $300,000, and she es...

Q: Assume Bob’s Boards has the following LIFO perpetual inventory record for skateboards

Assume Bob’s Boards has the following LIFO perpetual inventory record for skateboards for the month of March:
At March 31, the accountant for Bob’s Boards determines that the current replacement c...

Q: Match the accounting terms on the right with the corresponding definitions on

Match the accounting terms on the right with the corresponding definitions on the left a. Conservatism b. Full-disclosure c. LIFO d. Average cost e. FIFO f. Consistency g. Materiality h. Specific-Ide...

Q: Refer to the data for E5-16A. However, instead

Refer to the data for E5-16A. However, instead of the FIFO method, assume Golfer’s Delight, Inc., uses the LIFO method. Data from E5-16A: Golfer’s Delight, Inc., carries a line of titanium putters. G...

Q: Refer to the data for E5-28B. However, instead

Refer to the data for E5-28B. However, instead of the FIFO method, assume Tee Time, Inc., uses the LIFO method. Data from E5-28B: Tee Time, Inc., carries a line of monogrammed putters. Tee Time uses...

Q: Inland Equipment Sales, Inc., sells hand-held engine analyzers

Inland Equipment Sales, Inc., sells hand-held engine analyzers to automotive service shops. Inland Equipment Sales, Inc., started November with an inventory of 55 units that cost a total of $8,470. Du...

Q: Refer to the data for Inland Equipment Sales, Inc., in

Refer to the data for Inland Equipment Sales, Inc., in P5-40A. However, assume Inland Equipment Sales, Inc., uses the average cost method. Data from P5-40A: Inland Equipment Sales, Inc., sells hand-h...

Q: Mid Valley Sporting Goods, Inc., uses the LIFO inventory method

Mid Valley Sporting Goods, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Mid Valley Sporting Goods, Inc., has the following account balanc...

Q: Star Equipment, Inc., sells hand-held engine analyzers to

Star Equipment, Inc., sells hand-held engine analyzers to automotive service shops. Star Equipment, Inc., started April with an inventory of 75 units that cost a total of $10,500. During the month, St...

Q: Refer to the data for Star Line Equipment, Inc., in

Refer to the data for Star Line Equipment, Inc., in P5-48B. However, assume Star Equipment, Inc., uses the average cost method. Data from P5-48B: Star Equipment, Inc., sells hand-held engine analyzer...

Q: Titan Truck Parts, Inc., uses the LIFO inventory method and

Titan Truck Parts, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Titan Truck Parts, Inc., has the following account balances at December 3...

Q: This continues our accounting for Fitness Equipment Doctor, Inc. As

This continues our accounting for Fitness Equipment Doctor, Inc. As stated in the Continuing Problem in Chapter 4, Fitness Equipment Doctor, Inc., began selling gym equipment in June. For this problem...

Q: You just finished a telephone conversation with one of your clients,

You just finished a telephone conversation with one of your clients, who has decided to expand her business by beginning to offer some merchandise for sale. Previously, the company had only been a con...

Q: Score More Sports uses the LIFO inventory method. Score More Sports

Score More Sports uses the LIFO inventory method. Score More Sports started December with 10 helmets that cost $54 each. On December 19, Score More Sports bought 15 helmets at $52 each. On December 28...

Q: Score More Sports uses the (perpetual) LIFO inventory method.

Score More Sports uses the (perpetual) LIFO inventory method. Score More Sports started December with 10 helmets that cost $54 each. On December 19, Score More Sports bought 15 helmets at $52 each. On...

Q: Prime Corporation begins operations in late 2017. Prime decides to use

Prime Corporation begins operations in late 2017. Prime decides to use the single-pool LIFO method. Year-end inventories under FIFO are as follows: 2017……………………….$110,000 2018………………………..134,000 2019…...

Q: Texas Corporation disassembles old automobiles for the purpose of reselling their components

Texas Corporation disassembles old automobiles for the purpose of reselling their components (i.e., different types of metals, plastics, rubber, and other materials). Texas sells some of the items for...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Mower- Blower Sales Co. started business on January 20,

Mower- Blower Sales Co. started business on January 20, 2010. Products sold were snow blowers and lawn mowers. Each product sold for $350. Purchases during 2010 were as follows: The December 31, 201...

Q: The inventory records of Kuffel Co. reflected the following information for

The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010: Required: a. Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of...

Q: Proponents of the LIFO inventory cost-flow assumption argue that this

Proponents of the LIFO inventory cost-flow assumption argue that this costing method is superior to the alternatives because it results in better matching of revenue and expense. Required: a. Explain...

Q: Natco, Inc., uses the FIFO inventory costflow assumption. In

Natco, Inc., uses the FIFO inventory costflow assumption. In a year of rising costs and prices, the firm reported net income of $480,000 and average assets of $3,000,000. If Natco had used the LIFO co...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Parent Corporation owns 100% of Subsidiary Corporation’s single class of stock

Parent Corporation owns 100% of Subsidiary Corporation’s single class of stock. Its adjusted basis for the stock is $175,000. After adopting a plan of liquidation, Subsidiary distributes the following...

Q: Frank Coleman pounded away at his calculator as he tried in vain

Frank Coleman pounded away at his calculator as he tried in vain to reconcile his number for the LIFO reserve to the figure recorded by the client. 1 Frustrated and fatigued, Frank glanced at his wri...

Q: General Motors and Ford use the last‐in, first‐

General Motors and Ford use the last‐in, first‐out (LIFO) method to value their inventories. Honda (of Japan) and Daimler‐Benz (manufacturer of Mercedes‐Benz of Germany) use the first‐in, first‐out (F...

Q: MVP Corp uses LIFO to value its inventory. The 2016 inventory

MVP Corp uses LIFO to value its inventory. The 2016 inventory records disclose the following: On December 26, 2016, the company had a special, nonrecurring opportunity to purchase 40,000 units at $17...

Q: Cost for inventory purposes should be determined by the inventory cost‐

Cost for inventory purposes should be determined by the inventory cost‐flow method most clearly reflecting periodic income. Required: a. Describe the fundamental cost‐flow assumptions of the average c...

Q: Specific identification is sometimes said to be the ideal method for assigning

Specific identification is sometimes said to be the ideal method for assigning cost to inventory and to cost of goods sold. Required: a. List the arguments for and against the foregoing statement. b....

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Proponents of the LIFO inventory cost-flow assumption argue that this

Proponents of the LIFO inventory cost-flow assumption argue that this costing method is superior to the alternatives because it results in better matching of revenue and expense. Required: a. Explain...

Q: Natco, Inc., uses the FIFO inventory costflow assumption. In

Natco, Inc., uses the FIFO inventory costflow assumption. In a year of rising costs and prices, the firm reported net income of $480,000 and average assets of $3,000,000. If Natco had used the LIFO co...

Q: Mower- Blower Sales Co. started business on January 20,

Mower- Blower Sales Co. started business on January 20, 2010. Products sold were snow blowers and lawn mowers. Each product sold for $350. Purchases during 2010 were as follows: The December 31, 201...

Q: The inventory records of Kuffel Co. reflected the following information for

The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010: Required: a. Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of...

Q: Explain the influence of the use of LIFO inventory on the inventory

Explain the influence of the use of LIFO inventory on the inventory turnover.

Q: The cost of inventory at the close of the calendar year of

The cost of inventory at the close of the calendar year of the first year of operation is $40,000, using LIFO inventory, resulting in a profit before tax of $100,000. If the FIFO inventory would have...

Q: The number of days’ sales in inventory relates the amount of the

The number of days’ sales in inventory relates the amount of the ending inventory to the average daily cost of goods sold. Explain why this computation may be misleading under the following conditions...

Q: When a firm faces an inflationary condition and the LIFO inventory method

When a firm faces an inflationary condition and the LIFO inventory method is based on a periodic basis, purchases late in the year can have a substantial influence on profits. Comment.

Q: Why does LIFO result in a very unrealistic ending inventory figure in

Why does LIFO result in a very unrealistic ending inventory figure in a period of rising prices?

Q: Indicate which of the following accounting policies are conservative by placing an

Indicate which of the following accounting policies are conservative by placing an X under Yes or No. Assume inflationary conditions exist.

Q: Pacific Company sells electronic test equipment that it acquires from a foreign

Pacific Company sells electronic test equipment that it acquires from a foreign source. During the year, the inventory records reflected the following: Inventory is valued at cost using the LIFO inven...

Q: Income is to be evaluated under four different situations as follows:

Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO i...

Q: An annual report for International Paper Company included the following note:

An annual report for International Paper Company included the following note: The last-in, first-out inventory method is used to value most of International Paper’s U.S. inventories. If the first-in,...

Q: In a recent annual report, General Electric reported the following in

In a recent annual report, General Electric reported the following in its inventory note: It also reported a $23 million change in cost of goods sold due to “lower inventory levels.&...

Q: Income is to be evaluated under four different situations as follows:

Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO i...

Q: Contrast the effects of LIFO versus FIFO on reported assets (i

Contrast the effects of LIFO versus FIFO on reported assets (i.e., the ending inventory) when (a) prices are rising and (b) prices are falling.

Q: Contrast the income statement effect of LIFO versus FIFO (i.

Contrast the income statement effect of LIFO versus FIFO (i.e., on pretax income) when (a) prices are rising and (b) prices are falling.

Q: Contrast the effects of LIFO versus FIFO on cash outflow and inflow

Contrast the effects of LIFO versus FIFO on cash outflow and inflow.

Q: In its annual report, Caterpillar, Inc., a major manufacturer

In its annual report, Caterpillar, Inc., a major manufacturer of farm and construction equipment, reported the following information concerning its inventories: Inventories are stated at the lower of...

Q: Pool Corporation, Inc., reported in its recent annual report that

Pool Corporation, Inc., reported in its recent annual report that “In 2010, our industry experienced some price deflation. . . . In 2011, our industry experienced more normalized pri...

Q: A press release for Seneca Foods (licensee of the Libby’s brand

A press release for Seneca Foods (licensee of the Libby’s brand of canned fruits and vegetables) included the following information: The current year’s net earnings were $8,019,000 or $0.65 per dilute...

Q: Indicate whether the FIFO or LIFO inventory costing method normally produces each

Indicate whether the FIFO or LIFO inventory costing method normally produces each of the following effects under the listed circumstances. a. Declining costs Highest net income _____ Highest inventory...

Q: Indicate whether the FIFO or LIFO inventory costing method would normally be

Indicate whether the FIFO or LIFO inventory costing method would normally be selected when inventory costs are rising. Explain why.

Q: Following is partial information for the income statement of Audio Solutions Company

Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods, assuming the use of a periodic inventory system: Required: 1. Com...

Q: Following is partial information for the income statement of Arturo Technologies Company

Following is partial information for the income statement of Arturo Technologies Company under three different inventory costing methods, assuming the use of a periodic inventory system: Required: 1....

Q: Daniel Company uses a periodic inventory system. Data for the current

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,000 units at $38; purchases, 8,000 units at $4...

Q: The records at the end of January of the current year for

The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise: Beginning Inventory at FIFO: 19 Units @ $16 = $304 Beginning Inventor...

Q: The following note was contained in a recent Ford Motor Company annual

The following note was contained in a recent Ford Motor Company annual report: Required: 1. What amount of ending inventory would have been reported in the current year if Ford had used only FIFO? 2....

Q: Snyder’s-Lance is a leading snack-food company. The

Snyder’s-Lance is a leading snack-food company. The following note was contained in its recent annual report: Required: 1. What amount of ending inventory would have been reported i...

Q: In its annual report, ConocoPhillips reported that the company decreased its

In its annual report, ConocoPhillips reported that the company decreased its inventory levels during 2011. ConocoPhillips’s 2011 financial statements contain the following note: In 2011, a liquidation...

Q: Assume that a retailer’s beginning inventory and purchases of a popular item

Assume that a retailer’s beginning inventory and purchases of a popular item during January included: (1) 300 units at $7 in beginning inventory on January 1, (2) 450 units at $8 purchased on Januar...

Q: Consider the following information: beginning inventory, 10 units @ $

Consider the following information: beginning inventory, 10 units @ $20 per unit; first purchase, 35 units @ $22 per unit; second purchase, 40 units @ $24 per unit; 50 units were sold. What is cost of...

Q: For each of the following independent statements, indicate whether the trans

For each of the following independent statements, indicate whether the trans- action will increase (þ), decrease (), or have no effect (NE) on the basis of a shareholder’s stock in an S corporation....

Q: Compute current E & P for Sparrow Corporation (a calendar year

Compute current E & P for Sparrow Corporation (a calendar year, accrual basis taxpayer). Sparrow reported the following transactions during 2015, its second year of operation. Taxable income ………………………...

Q: Selected transactions completed by Kornett Company during its first fiscal year ended

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y8, were as follows: Jan. 3. Issued a check to establish a petty cash fund of $4,500. Feb. 26. Re...

Q: Jamie Keller was pleased with his new job position as director of

Jamie Keller was pleased with his new job position as director of international consolidation for Gamma Enterprises. Gamma Enterprises was a consolidation of high-tech gaming companies, with subsidiar...

Q: Water Products Corporation has been supplying high-quality bathroom fixtures to

Water Products Corporation has been supplying high-quality bathroom fixtures to its customers for several decades and uses a LIFO inventory system. Rapid increases in the cost of fixtures have resulte...

Q: Company A uses the FIFO method to account for inventory and Company

Company A uses the FIFO method to account for inventory and Company B uses the LIFO method. The two companies are exactly alike except for the difference in inventory cost flow assumptions. Costs of i...

Q: Company A uses the FIFO method to account for inventory and Company

Company A uses the FIFO method to account for inventory and Company B uses the LIFO method. The two companies are exactly alike except for the difference in inventory cost flow assumptions. Costs of i...

Q: The following comparative information is available for Rose Company for 2017.

The following comparative information is available for Rose Company for 2017. Instructions (a) Determine net income under each approach. Assume a 30% tax rate. (b) Determine net cash provided by opera...

Q: Nixon Wholesale Corp. uses the LIFO cost flow method. In

Nixon Wholesale Corp. uses the LIFO cost flow method. In the current year, profit at Nixon is running unusually high. The corporate tax rate is also high this year, but it is scheduled to decline sign...

Q: Deere & Company is a global manufacturer and distributor of agricultural,

Deere & Company is a global manufacturer and distributor of agricultural, construction, and forestry equipment. Suppose it reported the following information in its 2017 annual report. Instructio...

Q: Oscar Geer, a mid-level product manager for Theresa’s Shoes

Oscar Geer, a mid-level product manager for Theresa’s Shoes, thinks his company should switch from LIFO to FIFO. He says, “My bonus is based on net income. If we switch it will increase net income and...

Q: Discuss the impact the use of LIFO has on taxes paid,

Discuss the impact the use of LIFO has on taxes paid, cash flows, and the quality of earnings ratio relative to the impact of FIFO when prices are increasing.

Q: What is the LIFO reserve? What are the consequences of ignoring

What is the LIFO reserve? What are the consequences of ignoring a large LIFO reserve when analyzing a company?

Q: On January 1, 2017, Bryce Inc. changed from the

On January 1, 2017, Bryce Inc. changed from the LIFO method of inventory pricing to the FIFO method. Explain how this change in accounting principle should be treated in the company’s financial statem...

Q: Explain how the choice of one of the following accounting methods over

Explain how the choice of one of the following accounting methods over the other raises or lowers a company’s net income during a period of continuing inflation. (a) Use of FIFO instead of LIFO for in...

Q: Suppose the following information is from the 2017 annual report of American

Suppose the following information is from the 2017 annual report of American Greetings Corporation (all dollars in thousands). The notes to the company’s financial statements also i...

Q: The accounting records of Ohm Electronics show the following data.

The accounting records of Ohm Electronics show the following data. Beginning inventory……………………………….3,000 units at $5 Purchases………………………………………………8,000 units at $7 Sales………………………………………..…………...9,400 uni...

Q: The July 15, 2010, edition of CFO.com contains

The July 15, 2010, edition of CFO.com contains an article by Marie Leone entitled “Sucking the LIFO out of Inventory.” Instructions Read the article, which can be found at www.cfo.com/printable/articl...

Q: For each of the following cases, state whether the statement is

For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume that prices are rising. (a) Results in a higher quality of earnings ratio. (b) Results in higher phant...

Q: In its first month of operations, McLanie Company made three purchases

In its first month of operations, McLanie Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $8, and (3) 500 units at $9. Assuming there are 2...

Q: Winnebago Industries, Inc. is a leading manufacturer of motor homes

Winnebago Industries, Inc. is a leading manufacturer of motor homes. Suppose Winnebago reported ending inventory at August 29, 2017, of $46,850,000 under the LIFO inventory method. In the notes to its...

Q: Below is the Retained Earnings account for the year 2012 for Acadian

Below is the Retained Earnings account for the year 2012 for Acadian Corp. Instructions (a) Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type ment...

Q: In an article that appeared in the Wall Street Journal, the

In an article that appeared in the Wall Street Journal, the phrases “phantom (paper) profits” and “high LIFO profits” through involuntary liquidation were used. Explain these phrases.

Q: FIFO, weighted-average, and LIFO methods are often used

FIFO, weighted-average, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing t...

Q: What is the dollar-value method of LIFO inventory valuation?

What is the dollar-value method of LIFO inventory valuation? What advantage does the dollar-value method have over the specific goods approach of LIFO inventory valuation? Why will the traditional LIF...

Q: On December 31, 2011, the inventory of Powhattan Company amounts

On December 31, 2011, the inventory of Powhattan Company amounts to $800,000. During 2012, the company decides to use the dollar-value LIFO method of costing inventories. On December 31, 2012, the inv...

Q: Arna, Inc. uses the dollar-value LIFO method of

Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow. Instructions Compute the value of the 2012 and 2013 inventories using the dollar-value LIFO...

Q: Inventory information for Part 311 of Seminole Corp. discloses the following

Inventory information for Part 311 of Seminole Corp. discloses the following information for the month of June. Instructions (a) Assuming that the periodic inventory method is used, compute the cost...

Q: LoBianco Company’s record of transactions for the month of April was as

LoBianco Company’s record of transactions for the month of April was as follows. Instructions (a) Assuming that periodic inventory records are kept, compute the inventory at April...

Q: Tom Brady Shop began operations on January 2, 2012. The

Tom Brady Shop began operations on January 2, 2012. The following stock record card for footballs was taken from the records at the end of the year. A physical inventory on December 31, 2012, reveal...

Q: The following example was provided to encourage the use of the LIFO

The following example was provided to encourage the use of the LIFO method. In a nutshell, LIFO subtracts inflation from inventory costs, deducts it from taxable income, and records it in a LIFO reser...

Q: Sisko Company has used the dollar-value LIFO method for inventory

Sisko Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Sisko’s records. Instructions Calculate...

Q: The dollar-value LIFO method was adopted by King Corp.

The dollar-value LIFO method was adopted by King Corp. on January 1, 2012. Its inventory on that date was $160,000. On December 31, 2012, the inventory at prices existing on that date amounted to $151...

Q: Presented below is information related to Martin Company. /

Presented below is information related to Martin Company. Instructions Compute the ending inventory for Martin Company for 2009 through 2014 using the dollar-value LIFO method.

Q: The following information relates to the Choctaw Company. /

The following information relates to the Choctaw Company. Instructions Use the dollar-value LIFO method to compute the ending inventory for Choctaw Company for 2009 through 2013.

Q: On January 1, 2012, Bonanza Wholesalers Inc. adopted the

On January 1, 2012, Bonanza Wholesalers Inc. adopted the dollar-value LIFO inventory method for income tax and external financial reporting purposes. However, Bonanza continued to use the FIFO invento...

Q: Presented below is information related to Kaisson Corporation for the last 3

Presented below is information related to Kaisson Corporation for the last 3 years. Instructions Compute the ending inventories under the dollar-value LIFO method for 2011, 2012, and 2013. The base...

Q: Richardson Company cans a variety of vegetable-type soups. Recently

Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not underst...

Q: The following independent situations relate to inventory accounting. 1.

The following independent situations relate to inventory accounting. 1. Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowab...

Q: Ehlo Company is a multiproduct firm. Presented below is information concerning

Ehlo Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye. Instructions Compute cost of goods sold, assuming Ehlo uses: (a) Periodic system, FIF...

Q: The management of Tritt Company has asked its accounting department to describe

The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventori...

Q: Norman’s Televisions produces television sets in three categories: portable, midsize

Norman’s Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2012, Norman adopted dollar-value LIFO and decided to use a singl...

Q: Jane Yoakam, president of Estefan Co., recently read an article

Jane Yoakam, president of Estefan Co., recently read an article that claimed that at least 100 of the country’s largest 500 companies were either adopting or considering adopting the last-in, first-ou...

Q: Harrisburg Company is considering changing its inventory valuation method from FIFO to

Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, the management wishes to consider all of the effects on the c...

Q: Wilkens Company uses the LIFO method for inventory costing. In an

Wilkens Company uses the LIFO method for inventory costing. In an effort to lower net income, company president Lenny Wilkens tells the plant accountant to take the unusual step of recommending to the...

Q: In January 2012, Susquehanna Inc. requested and secured permission from

In January 2012, Susquehanna Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in, first-out (LIFO) method and elected t...

Q: SUPERVALU reported the following data in its annual report.

SUPERVALU reported the following data in its annual report. (a) Compute SUPERVALU’s inventory turnover ratios for 2009 and 2010, using: (1) Cost of sales and LIFO inventory. (2) Co...

Q: T J International was founded in 1969 as Trus Joist International.

T J International was founded in 1969 as Trus Joist International. The firm, a manufacturer of specialty building products, has its headquarters in Boise, Idaho. The company, through its partnership i...

Q: Englehart Company sells two types of pumps. One is large and

Englehart Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The following inventory data is available for the mo...

Q: In this simulation, you are asked to address questions regarding inventory

In this simulation, you are asked to address questions regarding inventory valuation and measurement. Prepare responses to all parts.

Q: What is the nature of the SEC guidance concerning the reporting of

What is the nature of the SEC guidance concerning the reporting of LIFO liquidations?

Q: What modifications to the conventional retail method are necessary to approximate a

What modifications to the conventional retail method are necessary to approximate a LIFO retail flow?

Q: Brewster Company began operations on January 1, 2012, adopting the

Brewster Company began operations on January 1, 2012, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2012 and, because there...

Q: Robinson Company began operations late in 2012 and adopted the conventional retail

Robinson Company began operations late in 2012 and adopted the conventional retail inventory method. Because there was no beginning inventory for 2012 and no markdowns during 2012, the ending inventor...

Q: You assemble the following information for Dillon Department Store, which computes

You assemble the following information for Dillon Department Store, which computes its inventory under the dollar-value LIFO method. Instructions Compute the cost of the inventory on December 31, 20...

Q: Presented below is information related to Atrium Corporation. /

Presented below is information related to Atrium Corporation. Instructions Compute the ending inventory under the dollar-value LIFO method at December 31, 2013. The cost-to-retail ratio for 2013 was...

Q: Mander Corporation began operations on January 1, 2012, with a

Mander Corporation began operations on January 1, 2012, with a beginning inventory of $34,300 at cost and $50,000 at retail. The following information relates to 2012. ______________________________Re...

Q: Springsteen Corporation adopted the dollar-value LIFO retail inventory method on

Springsteen Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2011. At that time the inventory had a cost of $54,000 and a retail price of $100,000. The following informa...

Q: Mueller Ltd., a local retailing concern in the Bronx, N

Mueller Ltd., a local retailing concern in the Bronx, N.Y., has decided to change from the conventional retail inventory method to the LIFO retail method starting on January 1, 2013. The company recom...

Q: As of January 1, 2012, Aristotle Inc. installed the

As of January 1, 2012, Aristotle Inc. installed the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2012, you obtai...

Q: Presented below are a number of items that may be encountered in

Presented below are a number of items that may be encountered in computing the cost to retail percentage when using the conventional retail method or the LIFO retail method. 1. Markdowns. 2. Markdown...

Q: Prab Robots, Inc., reported the following information regarding 2011–

Prab Robots, Inc., reported the following information regarding 2011–2012 inventory. Notes to Consolidated Financial Statements Note 1 (in part): Nature of Business and Significant...

Q: Ramirez Co. decides at the beginning of 2012 to adopt the

Ramirez Co. decides at the beginning of 2012 to adopt the FIFO method of inventory valuation. Ramirez had used the LIFO method for financial reporting since its inception on January 1, 2010, and had m...

Q: Presented on page 1410 are income statements prepared on a LIFO and

Presented on page 1410 are income statements prepared on a LIFO and FIFO basis for Carlton Company, which started operations on January 1, 2011. The company presently uses the LIFO method of pricing i...

Q: The management of Utrillo Instrument Company had concluded, with the concurrence

The management of Utrillo Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Utrillo changed its method of...

Q: Listed below are various types of accounting changes and errors.

Listed below are various types of accounting changes and errors. ______ 1. Change from FIFO to average cost inventory method. ______ 2. Change due to overstatement of inventory. ______ 3. Change from...

Q: Joblonsky Inc. has recently hired a new independent auditor, Karen

Joblonsky Inc. has recently hired a new independent auditor, Karen Ogleby, who says she wants “to get everything straightened out.” Consequently, she has proposed the accounting changes shown below an...

Q: Palmer Co. is evaluating the appropriate accounting for the following items

Palmer Co. is evaluating the appropriate accounting for the following items. 1. Management has decided to switch from the FIFO inventory valuation method to the LIFO inventory valuation method for all...

Q: Below is the net income of Benchley Instrument Co., a private

Below is the net income of Benchley Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. Instructions (Ignore tax considerations.) (a) Assume th...

Q: In preparation for significant international operations, ABC Co. has adopted

In preparation for significant international operations, ABC Co. has adopted a plan to gradually shift to the same accounting methods as used by its international competitors. Part of this plan includ...

Q: In this simulation, you are asked questions about changes in accounting

In this simulation, you are asked questions about changes in accounting principle. Prepare responses to all parts.

Q: Whitman Company began operations on January 1, 2010, and uses

Whitman Company began operations on January 1, 2010, and uses the average cost method of pricing inventory. Management is contemplating a change in inventory methods for 2013. The following informatio...

Q: Botticelli Inc. was organized in late 2010 to manufacture and sell

Botticelli Inc. was organized in late 2010 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported n...

Q: Shannon, Inc., changed from the LIFO cost flow assumption to

Shannon, Inc., changed from the LIFO cost flow assumption to the FIFO cost flow assumption in 2012. The increase in the prior year’s income before taxes is $1,200,000. The tax rate is 40%. Prepare Sha...

Q: In its first month of operations, Quirk Company made three purchases

In its first month of operations, Quirk Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $7, and (3) 200 units at $8. Assuming there are...

Q: The following information is available for Chemco Inc’s inventories as of June

The following information is available for Chemco Inc’s inventories as of June 30, 2015: We used the LIFO method of valuing our inventories for approximately 40% and 44% of total...

Q: Why would a company switch to the LIFO method of inventory valuation

Why would a company switch to the LIFO method of inventory valuation in an inflationary period?

Q: RareMetals Inc. sells a rare metal found only in underdeveloped countries

RareMetals Inc. sells a rare metal found only in underdeveloped countries overseas. As a result of unstable governments in these countries and the rarity of the metal, the price fluctuates significant...

Q: The following excerpts are from the 2013 Walgreen Co. Form 10

The following excerpts are from the 2013 Walgreen Co. Form 10-K: The accompanying Notes to Consolidated Financial Statements are integral parts of these statements. Notes to Consolidated Financial S...

Q: The accounting records of Robin Co. showed the following balances at

The accounting records of Robin Co. showed the following balances at January 1, 2018: Cash……………………………………………………………………………………………..$30,000 Beginning inventory (100 units @ $50, 70 units @ $55)………………………8,...

Q: The accounting records of Wall’s China Shop reflected the following balances as

The accounting records of Wall’s China Shop reflected the following balances as of January 1, 2018: Cash……………………………………………………………….$80,100 Beginning inventory……………33,000 (220 units @ $150) Common stock...

Q: The Brick Company had cash sales of $280,000 for

The Brick Company had cash sales of $280,000 for 2018, its first year of operation. On April 2, the company purchased 210 units of inventory at $390 per unit. On September 1, an additional 160 units w...

Q: What are some advantages and disadvantages of using the LIFO method of

What are some advantages and disadvantages of using the LIFO method of inventory valuation?

Q: The Shirt Shop had the following transactions for T-shirts for

The Shirt Shop had the following transactions for T-shirts for 2018, its first year of operations: During the year, The Shirt Shop sold 810 T-shirts for $20 each. Required: a. Compute the amount of...

Q: Bohr Company has a credit agreement with a syndicate of banks.

Bohr Company has a credit agreement with a syndicate of banks. In order to impose some limitations on Bohr’s financial riskiness, the credit agreement requires Bohr to maintain a current ratio of at l...

Q: The following information was used to prepare the financial statements for Delta

The following information was used to prepare the financial statements for Delta Chemical Company. Prepare the necessary notes to accompany the statements. Delta uses the LIFO inventory method on its...

Q: In each of the following independent situations, an example is given

In each of the following independent situations, an example is given requiring a trade-off between the qualitative characteristics discussed in the text. For each situation, identify the relevant char...

Q: One of the underlying assumptions of the accounting model is the going

One of the underlying assumptions of the accounting model is the going concern assumption. When this assumption is questionable, valuation methods used for assets and liabilities may differ from those...

Q: Using data in E6-16, indicate the effects of selecting

Using data in E6-16, indicate the effects of selecting FIFO and LIFO on the liquidity metric days’ sales in inventory and profitability metric return on sales. Data from Exercise 6-16: Assume that a fi...

Q: Do the terms FIFO and LIFO refer to techniques used in determining

Do the terms FIFO and LIFO refer to techniques used in determining quantities of the various classes of merchandise on hand? Explain.

Q: Does the term last-in in the LIFO method mean that

Does the term last-in in the LIFO method mean that the items in the inventory are assumed to be the most recent (last) acquisitions? Explain.

Q: What is the LIFO reserve, and why would an analyst be

What is the LIFO reserve, and why would an analyst be careful in interpreting the earnings of a company that has liquidated some of its LIFO reserve?

Q: Assume that a firm separately determined inventory under FIFO and LIFO and

Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. 1. In each space below, place the correct sign [less than (), or equal (=)] for each comparison, as...

Q: Match the items in the left-hand column with the descriptions

Match the items in the left-hand column with the descriptions/explanations in the right-hand column.

Q: Maness Company made a change in accounting for its inventories during the

Maness Company made a change in accounting for its inventories during the third quarter of its fiscal year. The company switched from the LIFO method to the average cost method. Describe the reporting...

Q: Chris Inc. has accumulated the following information for its second-

Chris Inc. has accumulated the following information for its second-quarter income statement for 20X2: Additional Information: First-quarter income before taxes was $100,000, and the estimated...

Q: During the third quarter of its 20X7 fiscal year, Press Company

During the third quarter of its 20X7 fiscal year, Press Company is considering the different methods of reporting accounting changes on its interim segments. Preliminary data are available for the thi...

Q: Select the correct answer for each of the following questions.

Select the correct answer for each of the following questions. Which of the following is an inherent difficulty in determining the results of operations on an interim basis? Cost of sales r...

Q: Progressive Company reported the following asset values in 2012 and 2013:

Progressive Company reported the following asset values in 2012 and 2013: In addition, in 2013, Progressive had sales of $4,800,000; cost of goods sold for the year was $2,900,000. As of the end of...

Q: Brooklyn Corporation had the following transactions relating to product X during September

Brooklyn Corporation had the following transactions relating to product X during September. Determine the ending inventory value under each of the following costing methods: 1. FIFO (perpetual) 2. F...

Q: Dutch Truck Sales sells semitrailers. The current inventory includes the following

Dutch Truck Sales sells semitrailers. The current inventory includes the following five semitrailers (identical except for paint color) along with purchase dates and costs: On May 20, 2013, a trucki...

Q: White Farm Supply’s records for the first three months of its existence

White Farm Supply’s records for the first three months of its existence show purchases of commodity Y2 as follows: The inventory of commodity Y2 at the end of October using FIFO is...

Q: Harrison Lumber Company uses a periodic LIFO method for inventory costing.

Harrison Lumber Company uses a periodic LIFO method for inventory costing. The following information relates to the plywood inventory carried by Harrison Lumber. Plywood inventory: Plywood purchases...

Q: A note to the financial statements of Highland Inc. at December

A note to the financial statements of Highland Inc. at December 31, 2013, reads as follows: Because of the manufacturer’s production problems for our Humdinger Limited line, our inve...

Q: Assume the Bullock Corporation had the following purchases and sales of its

Assume the Bullock Corporation had the following purchases and sales of its single product during its first three years of operation. Cost of goods sold is Bullock’s only expense....

Q: The Manwaring Products Company’s inventory record appears below. /

The Manwaring Products Company’s inventory record appears below. The company uses a LIFO cost flow assumption. It reported ending inventories as follows for its first three years o...

Q: Miller Mfg. has one LIFO pool. Information relating to the

Miller Mfg. has one LIFO pool. Information relating to the products in this pool is as follows: Beginning inventory, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: The Wernli Manufacturing Company manufactures a single product. The managers,

The Wernli Manufacturing Company manufactures a single product. The managers, Brandon and Chris Wernli, decided on December 31, 2010, to adopt the dollar-value LIFO inventory method. The inventory val...

Q: The company reported the following inventory data for the year:

The company reported the following inventory data for the year: Compute (1) Cost of goods sold and (2) Ending inventory assuming (a) FIFO inventory valuation, (b) LIFO inventory valuation, and...

Q: Jennifer Inc. adopted dollar-value LIFO on December 31,

Jennifer Inc. adopted dollar-value LIFO on December 31, 2010. Data for 2010–2013 follow: Inventory and index on the adoption date, December 31, 2010: Dollar-value LIFO inventory ....

Q: On February 15, 2014, Rooker, Madras & Associates compiled

On February 15, 2014, Rooker, Madras & Associates compiled the following information concerning inventory for five years. They used the dollar-value LIFO retail inventory method. Compute the inv...

Q: Indexes are used for two different purposes in computing the cost of

Indexes are used for two different purposes in computing the cost of LIFO layers with dollar-value LIFO. Clearly distinguish between these uses and describe how the indexes are applied.

Q: When applying the dollar-value LIFO retail method: (

When applying the dollar-value LIFO retail method: (a) How do beginning inventory values impact the computation of the cost percentage? (b) How are markdowns treated?

Q: (a) Under what conditions is a LIFO layer created?

(a) Under what conditions is a LIFO layer created? (b) What is meant by “LIFO reserve”?

Q: (a) What is the LIFO conformity rule? (

(a) What is the LIFO conformity rule? (b) How has the rule changed since it was first adopted?

Q: How can FIFO and LIFO assumptions be incorporated into the retail inventory

How can FIFO and LIFO assumptions be incorporated into the retail inventory method?

Q: What factors should a company consider in identifying the appropriate number of

What factors should a company consider in identifying the appropriate number of dollar value LIFO pools?

Q: Why are LIFO and average cost more complicated with a perpetual inventory

Why are LIFO and average cost more complicated with a perpetual inventory system than with a periodic system?

Q: What is the current status of LIFO under IASB standards?

What is the current status of LIFO under IASB standards?

Q: Identify three different indexes that can be used in valuing a new

Identify three different indexes that can be used in valuing a new LIFO layer with dollar-value LIFO. Which index is most consistent with the LIFO assumption?

Q: Althea Company uses a perpetual inventory system. From the following information

Althea Company uses a perpetual inventory system. From the following information, prepare an inventory record form (a) assuming that the FIFO method is in use and (b) assuming that the LIFO method is...

Q: Ashley Company uses a perpetual inventory system. From the following information

Ashley Company uses a perpetual inventory system. From the following information, prepare an inventory record form (a) assuming that the FIFO method is in use and (b) assuming that the LIFO method is...

Q: Many countries around the world do not allow use of the LIFO

Many countries around the world do not allow use of the LIFO method. The harmonization of accounting standards across countries may require a compromise on the use of LIFO concepts. Some accountants i...

Q: Ford Motor (automotive) and Caterpillar (heavy equipment) both

Ford Motor (automotive) and Caterpillar (heavy equipment) both use the LIFO inventory valuation method. Caterpillar uses it for 70% of its inventories and Ford for 28% of its inventories. Data from th...

Q: You are the assistant controller of Duo-Therm Company and are

You are the assistant controller of Duo-Therm Company and are in charge of preparing the financial statements and tax returns. One of your colleagues, the assistant controller in charge of working cap...

Q: You have risen fast in Lam Tin Industries and are now in

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Q: Refer to Practice 9-6. Assume that the sales occurred

Refer to Practice 9-6. Assume that the sales occurred as follows: January 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: The company started business at the beginning of Year 1. Inventory

The company started business at the beginning of Year 1. Inventory purchases and sales during the first four years of the company’s business are as follows: Compute the company&aci...

Q: Refer to Practice 9-8. Compute the following:

Refer to Practice 9-8. Compute the following: In Practice 9-8 The company started business at the beginning of Year 1. Inventory purchases and sales during the first four years of the companyâ&...

Q: Refer to Practice 9-8. Assume that the company has

Refer to Practice 9-8. Assume that the company has no expenses except for cost of goods sold, the selling price per unit is $6 in each year, and that the income tax rate is 40%. Compute the total amou...

Q: The company compiled the following information concerning inventory for the current year

The company compiled the following information concerning inventory for the current year: Compute the inventory cost at year-end using the dollar-value LIFO retail method.

Q: Norsk Corporation sells household appliances and uses LIFO for inventory costing.

Norsk Corporation sells household appliances and uses LIFO for inventory costing. The inventory contains 10 different products, and historical LIFO layers are maintained for each of them. The LIFO lay...

Q: The Greenriver Manufacturing Company manufactures two products: Raft and Float.

The Greenriver Manufacturing Company manufactures two products: Raft and Float. At December 31, 2012, Greenriver used the FIFO inventory method. Effective January 1, 2013, Greenriver changed to the LI...

Q: The Bergman Company sells three different products. Five years ago,

The Bergman Company sells three different products. Five years ago, management adopted the LIFO inventory method and established three specific pools of goods. Bergman values all incremental layers of...

Q: Bob’s Repair Shop began operations on January 1, 2008. After

Bob’s Repair Shop began operations on January 1, 2008. After discussing the matter with his accountant, Bob decided dollar-value LIFO should be used for inventory costing. Informatio...

Q: In 2010, Van Hover Inc. adopted the dollar-value

In 2010, Van Hover Inc. adopted the dollar-value LIFO retail inventory method. The January 1, 2010, price index was 1.00. The following data are available for the 4-year period ending December 31, 201...

Q: You are the controller of the Ford Steel Co. The economy

You are the controller of the Ford Steel Co. The economy enters a period of high inflation. Although profits are higher this year than last, you realize that the cost to replace inventory is also high...

Q: The White Wove Corporation began operations in 2013. A summary of

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Q: The company has one LIFO pool. Information relating to the products

The company has one LIFO pool. Information relating to the products in this pool is as follows: Beginning inventory, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: The company manufactures a single product and has decided to adopt the

The company manufactures a single product and has decided to adopt the dollar-value LIFO inventory method. The inventory value on that date using the newly adopted dollar-value LIFO method was $100,00...

Q: Laura Badora Company has been using LIFO inventory. The company is

Laura Badora Company has been using LIFO inventory. The company is required to disclose the replacement cost of its inventory and the replacement cost of its cost of goods sold on its annual statement...

Q: A partial balance sheet and income statement for King Corporation follow:

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Q: J. Shaffer Company has an ending inventory of $360,

J. Shaffer Company has an ending inventory of $360,500 and a cost of goods sold for the year of $2,100,000. It has used LIFO inventory for a number of years because of persistent inflation. Required:...

Q: The financial statements of The Hershey Company appear in Appendix B,

The financial statements of The Hershey Company appear in Appendix B, following the financial statements for Tootsie Roll in Appendix A. Appendix A: Instructions: (a) Based on the information in th...

Q: The July 15, 2010, edition of CFO.com contains

The July 15, 2010, edition of CFO.com contains an article by Marie Leone entitled “Sucking the LIFO out of Inventory.” Instructions: Read the article, which can be found at www.cfo.com/printable/arti...

Q: Suppose the following information is from the 2014 annual report of American

Suppose the following information is from the 2014 annual report of American Greetings Corporation (all dollars in thousands). The notes to the company’s financial statements also...

Q: Dunbar Distribution markets CDs of numerous performing artists. At the beginning

Dunbar Distribution markets CDs of numerous performing artists. At the beginning of March, Dunbar had in beginning inventory 2,500 CDs with a unit cost of $7. During March, Dunbar made the following p...

Q: Groves Company Inc. had a beginning inventory of 100 units of

Groves Company Inc. had a beginning inventory of 100 units of Product MLN at a cost of $8 per unit. During the year, purchases were: Groves Company uses a periodic inventory system. Sales totaled 1,...

Q: The management of Tinker Inc. asks your help in determining the

The management of Tinker Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2014, the accounting records show these data. Inventory, Janu...

Q: You have the following information for Wooderson Gems. Wooderson uses the

You have the following information for Wooderson Gems. Wooderson uses the periodic method of accounting for its inventory transactions. Wooderson only carries one brand and size of diamondsâ...

Q: Suppose this information (in millions) is available for the Automotive

Suppose this information (in millions) is available for the Automotive and Other Operations Divisions of General Motors Corporation for a recent year. General Motors uses the LIFO inventory method. B...

Q: Lifetime Distribution markets classic children’s books. At the beginning of June

Lifetime Distribution markets classic children’s books. At the beginning of June, Lifetime had in beginning inventory 1,200 books with a unit cost of $3. During June, Lifetime made the following purch...

Q: Smythe Company Inc. had a beginning inventory of 200 units of

Smythe Company Inc. had a beginning inventory of 200 units of Product ERV at a cost of $6 per unit. During the year, purchases were: Smythe Company uses a periodic inventory system. Sales totaled 1,...

Q: The management of Weigel Inc. asks your help in determining the

The management of Weigel Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2014 the accounting records show these data. Inventory, Janua...

Q: You have the following information for Limex Watches. Limex uses the

You have the following information for Limex Watches. Limex uses the periodic method of accounting for its inventory transactions. Limex carries only one brand of hand-crafted jeweled watchesâ&#...

Q: Suppose this information is available for the Automotive Sector of NoGo Motor

Suppose this information is available for the Automotive Sector of NoGo Motor Company for 2014. NoGo uses the LIFO inventory method. (in millions) Beginning inventory.…………………………………. $ 10,017 Ending i...

Q: George Orear, a mid-level product manager for Theresa’s Shoes

George Orear, a mid-level product manager for Theresa’s Shoes, thinks his company should switch from LIFO to FIFO. He says, “My bonus is based on net income. If we switch it will increase net income a...

Q: “When perpetual inventory records are kept, the results under the

“When perpetual inventory records are kept, the results under the FIFO and LIFO methods are the same as they would be in a periodic inventory system.” Do you agree? Explain.

Q: In its first month of operations, Giffin Company made three purchases

In its first month of operations, Giffin Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $8, and (3) 500 units at $9. Assuming there are...

Q: Data for Giffin Company are presented in BE6-2. Compute

Data for Giffin Company are presented in BE6-2. Compute the cost of the ending inventory under the average-cost method. (Round the cost per unit to three decimal places.) Data given in BE 2: In its f...

Q: Reagen Wholesale Corp. uses the LIFO cost flow method. In

Reagen Wholesale Corp. uses the LIFO cost flow method. In the current year, profit at Reagen is running unusually high. The corporate tax rate is also high this year, but it is scheduled to decline si...

Q: The accounting records of Tuel Electronics show the following data.

The accounting records of Tuel Electronics show the following data. Beginning inventory 3,000 units at …………………………..$5 Purchases 8,000 units at …………………………………………$7 Sales 9,400 units at …………………………………………...

Q: Deere & Company is a global manufacturer and distributor of agricultural,

Deere & Company is a global manufacturer and distributor of agricultural, construction, and forestry equipment. Suppose it reported the following information in its 2014 annual report. Instructi...

Q: The following comparative information is available for Keysor Company for 2014.

The following comparative information is available for Keysor Company for 2014. Instructions: (a) Determine net income under each approach. Assume a 30% tax rate. (b) Determine net cash provided by...

Q: In its first month of operations, Bethke Company made three purchases

In its first month of operations, Bethke Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $7, and (3) 200 units at $8. Assuming there are...

Q: R. J. Graziano Wholesale Corp. uses the LIFO method

R. J. Graziano Wholesale Corp. uses the LIFO method of inventory costing. In the current year, profit at R. J. Graziano is running unusually high. The corporate tax rate is also high this year, but it...

Q: “When perpetual inventory records are kept, the results under the

“When perpetual inventory records are kept, the results under the FIFO and LIFO methods are the same as they would be in a periodic inventory system.” Do you agree? Explain.

Q: Linda’s Boards sells a snowboard, Xpert, that is popular with

Linda’s Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Linda’s purchases of Xpert snowboards during September...

Q: Xiong Co. uses a periodic inventory system. Its records show

Xiong Co. uses a periodic inventory system. Its records show the following for the month of May, in which 65 units were sold Instructions Compute the ending inventory at May 31 and cost of goods sol...

Q: Express Distribution markets CDs of the performing artist Fishe. At the

Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory 2,000 of Fishe’s CDs with a unit cost of $7. During October, Express ma...

Q: Ziad Company had a beginning inventory on January 1 of 150 units

Ziad Company had a beginning inventory on January 1 of 150 units of Product 4-18-15 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15 400 units at $23………..Sept. 4...

Q: The management of Felipe Inc. is reevaluating the appropriateness of using

The management of Felipe Inc. is reevaluating the appropriateness of using its present inventory cost fl ow method, which is average-cost. The company requests your help in determining the results of...

Q: Fatigues Surplus began October with 72 tents that cost $17 each

Fatigues Surplus began October with 72 tents that cost $17 each. During the month, Fatigues Surplus made the following purchases at cost: Fatigues Surplus sold 324 tents and at October 31 the ending...

Q: The records of Bell Aviation include the following accounts for inventory of

The records of Bell Aviation include the following accounts for inventory of aviation fuel at December 31 of the current year: Requirements 1. Prepare a partial income statement through gross profi...

Q: SWAT Team Surplus began July with 66 tents that cost $23

SWAT Team Surplus began July with 66 tents that cost $23 each. During the month, SWAT Team Surplus made the following purchases at cost: SWAT Team Surplus sold 310 tents, and at July 31 the ending in...

Q: The records of Buzz Aviation include the following accounts for inventory of

The records of Buzz Aviation include the following accounts for inventory of aviation fuel at December 31 of the current year: Requirements 1. Prepare a partial income statement through gross profi...

Q: The next two questions use the following facts. Perfect Corner Frame

The next two questions use the following facts. Perfect Corner Frame Shop wants to know the effect of different inventory costing methods on its financial statements. Inventory and purchases data for...

Q: In a period of rising prices, a. Net income

In a period of rising prices, a. Net income under LIFO will be higher than under FIFO. b. Gross profit under FIFO will be higher than under LIFO. c. LIFO inventory will be greater than FIFO invento...

Q: Use the data for Kens in Exercise 6-16A to illustrate

Use the data for Kens in Exercise 6-16A to illustrate Kens income tax advantage from using LIFO over FIFO. Sales revenue is $6,600, operating expenses are $1,500, and the income tax rate is 35%. How m...

Q: For each of the following situations, identify the inventory method that

For each of the following situations, identify the inventory method that you would use or, given the use of a particular method, state the strategy that you would follow to accomplish your goal: a. In...

Q: Determine whether each of the following actions in buying, selling,

Determine whether each of the following actions in buying, selling, and accounting for inventories is ethical or unethical. Give your reason for each answer. 1. In applying the lower-of-cost-or-marke...

Q: Jeffersons Copy Center uses laser printers. Assume Jefferson started the year

Jeffersons Copy Center uses laser printers. Assume Jefferson started the year with 92 containers of ink (average cost of $9.00 each, FIFO cost of $8.90 each, LIFO cost of $8.05 each). During the year,...

Q: This exercise should be used in conjunction with Short Exercise 6-

This exercise should be used in conjunction with Short Exercise 6-4. Jefferson is a corporation subject to a 30% income tax. Compute Jeffersons income tax expense under the average, FIFO, and LIFO inv...

Q: Microdata.com uses the LIFO method to account for inventory.

Microdata.com uses the LIFO method to account for inventory. Microdata is having an unusually good year, with net income well above expectations. The company’s inventory costs are rising rapidly. What...

Q: Smith Saxophone Company is nearing the end of its worst year ever

Smith Saxophone Company is nearing the end of its worst year ever. With two weeks until year-end, it appears that net income for the year will have decreased by 25% from last year. Joe Smith, the pres...

Q: Suppose Trendy Now Fashions, a specialty retailer, had these records

Suppose Trendy Now Fashions, a specialty retailer, had these records for ladies evening gowns during 2010. Assume sales of evening gowns totaled 130 units during 2010 and that Trendy Now uses the LI...

Q: MusicPlace.net specializes in sound equipment. Because each inventory item

MusicPlace.net specializes in sound equipment. Because each inventory item is expensive, MusicPlace uses a perpetual inventory system. Company records indicate the following data for a line of speaker...

Q: Suppose a Waldorf store in Atlanta, Georgia, ended November 2010

Suppose a Waldorf store in Atlanta, Georgia, ended November 2010 with 900,000 units of merchandise that cost an average of $5 each. Suppose the store then sold 800,000 units for $4.8 million during De...

Q: Thurston & Talty, a partnership, had the following inventory data

Thurston & Talty, a partnership, had the following inventory data: Thurston & Talty need to know the company’s gross profit percentage and rate of inventory turnover for 20...

Q: Use the data for Rons, Inc., in Exercise 6-

Use the data for Rons, Inc., in Exercise 6-29B to illustrate Rons income tax advantage from using LIFO over FIFO. Sales revenue is $8,750, operating expenses are $2,000, and the income tax rate is 32%...

Q: MusicLife.net specializes in sound equipment. Because each inventory item

MusicLife.net specializes in sound equipment. Because each inventory item is expensive, MusicLife uses a perpetual inventory system. Company records indicate the following data for a line of speakers:...

Q: During 2010, Vanguard, Inc., changed to the LIFO method

During 2010, Vanguard, Inc., changed to the LIFO method of accounting for inventory . Suppose that during 2011, Vanguard changes back to the FIFO method and the following year Vanguard switches back t...

Q: Suppose a Williams store in Cleveland, Ohio, ended September 2010

Suppose a Williams store in Cleveland, Ohio, ended September 2010 with 1,100,000 units of merchandise that cost an average of $9.00 each. Suppose the store then sold 1,000,000 units for $9.7 million d...

Q: Durkin & Davis, a partnership, had these inventory data:

Durkin & Davis, a partnership, had these inventory data: Durkin & Davis need to know the company’s gross profit percentage and rate of inventory turnover for 2010 under 1....

Q: O’Brien Company manufactures and sells one product. The following information pertains

O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materia...

Q: O’Brien Company manufactures and sells one product. The following information pertains

O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materia...

Q: If costs are declining, will the LIFO or FIFO method of

If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of goods sold? Why?

Q: Refer to the information in QS 6-10 and assume the

Refer to the information in QS 6-10 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per uni...

Q: Refer to the information in QS 6-4 and assume the

Refer to the information in QS 6-4 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per unit...

Q: Refer to the information in QS 6-10 and assume the

Refer to the information in QS 6-10 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per unit...

Q: On January 1, 2014, Jenner Inc. changed from the

On January 1, 2014, Jenner Inc. changed from the LIFO method of inventory pricing to the FIFO method. Explain how this change in accounting principle should be treated in the company’s financial state...

Q: In its fi rst month of operations, McLanie Company made three

In its fi rst month of operations, McLanie Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $8, and (3) 500 units at $9. Assuming there are...

Q: Data for McLanie Company are presented in BE6-4. Compute

Data for McLanie Company are presented in BE6-4. Compute the cost of the ending inventory under the average-cost method. (Round the cost per unit to three decimal places.) Reference Data BE6-4: In it...

Q: For each of the following cases, state whether the statement is

For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume that prices are rising. (a) Results in a higher quality of earnings ratio. (b) Results in higher phant...

Q: The July 15, 2010, edition of CFO.com contains

The July 15, 2010, edition of CFO.com contains an article by Marie Leone entitled “Sucking the LIFO out of Inventory.” Instructions Read the article, which can be found at www.cfo.com/printable/artic...

Q: Discuss the impact the use of LIFO has on taxes paid and

Discuss the impact the use of LIFO has on taxes paid and cash flows relative to the impact of FIFO when prices are increasing.

Q: Oscar Geer, a mid-level product manager for Theresa’s Shoes

Oscar Geer, a mid-level product manager for Theresa’s Shoes, thinks his company should switch from LIFO to FIFO. He says, “My bonus is based on net income. If we switch it will increase net income and...

Q: The following comparative information is available for Rose Company for 2017.

The following comparative information is available for Rose Company for 2017. Instructions (a) Determine net income under each approach. Assume a 30% tax rate. (b) Determine net cash provided by ope...

Q: (Note that this is the same problem as Problem 5-

(Note that this is the same problem as Problem 5-4, but assuming the use of the partial equity method.) On January 1, 2013, Porter Company purchased an 80% interest in the capital stock of Salem Compa...

Q: (Note that this is the same problem as Problem 5-

(Note that this is the same problem as Problem 5-4 and Problem 5-11, but assuming the use of the complete equity method.) On January 1, 2013, Porter Company purchased an 80% interest in the capital st...

Q: On January 1, 2013, Porter Company purchased an 80%

On January 1, 2013, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,...

Q: Pretzel Company acquired the assets (except for cash) and assumed

Pretzel Company acquired the assets (except for cash) and assumed the liabilities of Salt Company on January 2, 2015. As compensation, Pretzel Company gave 30,000 shares of its common stock, 15,000 sh...

Q: If a firm uses the LIFO method to account for inventories,

If a firm uses the LIFO method to account for inventories, is the firm required to disclose the excess of replacement or current cost over the stated LIFO value?

Q: Suppose that a firm would like to adopt the LIFO method to

Suppose that a firm would like to adopt the LIFO method to account for its inventories, but it is not practical to determine the amounts assigned to major classes of inventories. Can the firm use the...

Q: Barley Corporation used the FIFO method for inventory valuation when it began

Barley Corporation used the FIFO method for inventory valuation when it began operations because this reflected the true physical flow of inventory. Its inventory under FIFO is valued at $375,000 at t...

Q: Explain the advantages and disadvantages of a publicly held company using LIFO

Explain the advantages and disadvantages of a publicly held company using LIFO for inventory valuation.

Q: Exhibits 1.26–1.28 of Integrative Case 1

Exhibits 1.26–1.28 of Integrative Case 1.1 (Chapter 1) present the financial statements for Walmart for 2012–2015. In addition, the website for this text contains W...

Q: A large manufacturer of truck and car tires recently changed its cost

A large manufacturer of truck and car tires recently changed its cost-flow assumption method for inventories at the beginning of 2017. The manufacturer has been in operation for almost 40 years, and f...

Q: Balfour Corporation acquired 100% of Tobac, Inc., a foreign

Balfour Corporation acquired 100% of Tobac, Inc., a foreign corporation, for 33,000,000 FC. The acquisition, which was accounted for as a purchase, occurred on July 1, 2015, when Tobacâ€
...

Q: Radix, Inc., operates primarily as a distributor of components for

Radix, Inc., operates primarily as a distributor of components for gasoline compressors. In the first quarter of 2015, the company reported a gross profit of $248,000 on net sales of $1,360,000. After...

Q: A new client of yours has prepared the following condensed income statement

A new client of yours has prepared the following condensed income statement for the second quarter of 2015. Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Granger Supply, Inc., has two main areas of inventory,

Granger Supply, Inc., has two main areas of inventory, industrial supplies and industrial cleaning equipment. The FIFO inventory method is used for industrial supplies, and the LIFO method is used for...

Q: Selected transactions completed by Kornett Company during its first fiscal year ended

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows: Unemployment tax rates: State unemployment …â...

Q: The beginning inventory for Midnight Supplies and data on purchases and sales

The beginning inventory for Midnight Supplies and data on purchases and sales for a three month period are shown in Problem 6-1A. Problem 6-1A: The beginning inventory at Midnight Supplies and data...

Q: The beginning inventory for Dunne Co. and data on purchases and

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 6-1B. Problem 6-1B: The beginning inventory at Dunne Co. and data on purchases and...

Q: Kramer began operations early in 2017 and made the following purchases:

Kramer began operations early in 2017 and made the following purchases: Kramer used the FIFO method to value its inventory and reported cost of goods sold expense for the year of $4,000. Required:...

Q: Walgreens Boots Alliance, Inc. and Subsidiaries’ (the company created

Walgreens Boots Alliance, Inc. and Subsidiaries’ (the company created with the combination of Walgreens and Boots Alliance) Form 10-K includes the following in the note that summarizes its accounting...

Q: The following information is available concerning Stillwater Inc.: /

The following information is available concerning Stillwater Inc.: Stillwater, which uses a perpetual system, sold 1,000 units for $22 each during the year. Sales occurred on the following dates: U...

Q: Three large mass merchandisers use the following methods to value ending inventory

Three large mass merchandisers use the following methods to value ending inventory: Company X—weighted average cost Company Y—first-in, first-out (FIFO) Company Z—last-in, first-out (LIFO) The cost...

Q: As controller of a widely held public company, you are concerned

As controller of a widely held public company, you are concerned with making the best decisions for the stockholders. At the end of its first year of operations, you are faced with the choice of metho...

Q: Jones Corporation switched from the LIFO method of costing inventories to the

Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 2017. The LIFO inventory at the end of 2016 would have been $80,000 higher using FIFO. Rep...

Q: Keefer, Inc., began business on January 1, 2016.

Keefer, Inc., began business on January 1, 2016. Information on its inventory purchases and sales during 2016 and 2017 follow: Required: 1. Calculate ending inventory, cost of goods sold, and gros...

Q: The following is an excerpt from the financial statements of Talbot Industries

The following is an excerpt from the financial statements of Talbot Industries: Effective September 30, 2016, the Company changed its method of accounting for inventories from the LIFO method princi...

Q: JKW Corporation has been selling plumbing supplies since 1981. In 2003

JKW Corporation has been selling plumbing supplies since 1981. In 2003, the company adopted the LIFO method of valuing its inventory. The company has grown steadily over the years and a layer has been...

Q: Don Facundo Bacardy Maso founded the original Bacardi® rum business in

Don Facundo Bacardy Maso founded the original Bacardi® rum business in Cuba in 1862. The following information is excerpted from Bacardi Corporation’s annual report for th...

Q: Sirotka Retail Company began doing business in 2015. The following information

Sirotka Retail Company began doing business in 2015. The following information pertains to its first three years of operation: Assume the following: The income tax rate is 40%. Purchase and sale p...

Q: Caldwell Corporation operates an ice cream processing plant and uses the FIFO

Caldwell Corporation operates an ice cream processing plant and uses the FIFO inventory cost flow assumption. A partial income statement for the year ended December 31, 2017, follows: Caldwellâ...

Q: Ramps by Jake, Inc., manufactures skateboard ramps. The company

Ramps by Jake, Inc., manufactures skateboard ramps. The company uses independent sales representatives to market its products and pays a commission of 8% on each sale. Data regarding the five styles o...

Q: 1. Refer to the facts in Problem 9-16.

1. Refer to the facts in Problem 9-16. Repeat the requirements assuming that Jake uses the FIFO cost flow assumption. 2. Explain how the financial statements are affected when a company decides that N...

Q: Bravo Wholesalers, Inc., began its business on January 1,

Bravo Wholesalers, Inc., began its business on January 1, 2017. Information on its inventory purchases and sales during 2017 follows: Required: Assume a tax rate of 40%. 1. Compute the cost of endin...

Q: Jeanette Corporation’s president is in a dilemma regarding which inventory method (

Jeanette Corporation’s president is in a dilemma regarding which inventory method (LIFO or FIFO) to use. The controller provides the following list of factors that should be considered before making a...

Q: Princess Retail Stores started doing business on January 1, 2017.

Princess Retail Stores started doing business on January 1, 2017. The following data reflect its inventory purchases and sales during the year: Required: 1. Compute gross margin and cost of ending i...

Q: Packard, Inc., adopted the dollar-value LIFO inventory method

Packard, Inc., adopted the dollar-value LIFO inventory method on June 30, 2016, the end of its fiscal year. Packard’s inventory records provide the following information: Calculate...

Q: The following inventory note appears in General Electric’s Year 3 annual report

The following inventory note appears in General Electric’s Year 3 annual report. LIFO revaluations decreased $70 million in Year 3, compared with decreases of $169 million in ear 2...

Q: The following information related to ExxonMobil’s inventories is taken from its 2014

The following information related to ExxonMobil’s inventories is taken from its 2014 annual report. 3. Miscellaneous Financial Information In 2014, 2013, and 2012, net income include...

Q: For several years, the Securities and Exchange Commission (SEC)

For several years, the Securities and Exchange Commission (SEC) has been considering whether to transition U.S. firms to International Financial Reporting Standards (IFRS) for filing public financial...

Q: The following information related to Caterpillar’s inventories is taken from its 2015

The following information related to Caterpillar’s inventories is taken from its 2015 annual report. Use this information in answering the questions that follow. There were no LIFO l...

Q: KW Steel Corp. uses the LIFO method of inventory valuation.

KW Steel Corp. uses the LIFO method of inventory valuation. Waretown Steel, KW’s major competitor, instead uses the FIFO method. The following are excerpts from each companyâ&#...

Q: Nathan’s Grills, Inc., imports and sells premium-quality gas

Nathan’s Grills, Inc., imports and sells premium-quality gas grills. The company had the following layers in its LIFO inventory at January 1, 2017, at which time the replacement cost...

Q: Moore Corporation uses the FIFO cost flow method and has numerous units

Moore Corporation uses the FIFO cost flow method and has numerous units of two products in its ending inventory. Each is accounted for at the lower of cost or net realizable value under Accounting Sta...

Q: Acute Company manufactures a single product. On December 31, 2014

Acute Company manufactures a single product. On December 31, 2014, it adopted the dollar- value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was deter...

Q: On December 31, 2016, Fern Company adopted the dollar-

On December 31, 2016, Fern Company adopted the dollar-value LIFO inventory method. All of Fern’s inventories constitute a single pool. The inventory on December 31, 2016, using the dollar-value LIFO i...

Q: Cost for inventory purposes should be determined by the inventory cost flow

Cost for inventory purposes should be determined by the inventory cost flow method most clearly reflecting periodic income. 1. Describe the fundamental cost flow assumptions for the average cost, FIFO...

Q: Jessica’s Office Supply, Inc., had 300 calculators on hand at

Jessica’s Office Supply, Inc., had 300 calculators on hand at January 1, 2017, costing $16 each. Purchases and sales of calculators during the month of January were as follows: Jes...

Q: Barden, Inc., operates a retail chain that specializes in baby

Barden, Inc., operates a retail chain that specializes in baby clothes and accessories that are made to its specifications by a number of overseas manufacturers. Barden began operations in 2008 and ha...

Q: Sunny Day Stores operates convenience stores throughout much of the United States

Sunny Day Stores operates convenience stores throughout much of the United States. The industry is highly competitive, with low profit margins. The company’s competition includes nat...

Q: Neville Company decides at the beginning of 2017 to adopt the FIFO

Neville Company decides at the beginning of 2017 to adopt the FIFO method of inventory valuation. It had used the LIFO method for financial reporting since its inception on January 1, 2015, and had ma...

Q: The following income statement, statement of cash flows, and additional

The following income statement, statement of cash flows, and additional information are available for PEK Company: Additional information: a. Beginning inventory and purchases for the one product t...

Q: Select the best answer for each of the following. 1

Select the best answer for each of the following. 1. Which of the following is not a consideration in segment reporting for diversified companies? (a) Consolidation policy. (b) Defining the segments....

Q: British Petroleum’s income statement was prepared using IFRS is presented below (

British Petroleum’s income statement was prepared using IFRS is presented below (in $ millions). ExxonMobil Corporation’s income statement prepared using U.S. GA...

Q: The partnerships of Up & Down and Back & Forth started in

The partnerships of Up & Down and Back & Forth started in business on July 1, 2011; each partnership owns one retail appliance store. It was agreed as of June 30, 2014, to combine the partners...

Q: Zambia Pastry uses a periodic inventory system. Its records show the

Zambia Pastry uses a periodic inventory system. Its records show the following for the month of May, in which 70 units were sold. Instructions: Compute the ending inventory at May 31 using the FIFO...

Q: In its first month of operations Rusch BBQ made three purchases of

In its first month of operations Rusch BBQ made three purchases of sausages in the following sequence: (1) 300 pounds at $6, (2) 400 pounds at $7, and (3) 200 pounds at $8. Assuming there are 450 p...

Q: Sherpers carries a special French wine that is popular with wine enthusiasts

Sherpers carries a special French wine that is popular with wine enthusiasts. Below is information relating to Sherper’s purchases of this wine during September. During the same mont...

Q: J. K. Leask Wholesale Corp. uses the LIFO method

J. K. Leask Wholesale Corp. uses the LIFO method of inventory costing. In the current year, profit at J. K. Leask is running unusually high. The corporate tax rate is also high this year, but it is sc...

Q: Data for Rusch BBQ are presented in 9-2. Compute

Data for Rusch BBQ are presented in 9-2. Compute the cost of the ending inventory under the average-cost method, assuming there are 450 pounds on hand. Presented in 9-2: In its first month of operat...

Q: Exhibit 16.22 presents financial data, including a partial statement

Exhibit 16.22 presents financial data, including a partial statement of cash flows, for LKR Company for the year. Fill in the numbers in the statement of cash flows. Then respond to the following ques...

Q: Exhibits 17.11 and 17.12 present a partial set

Exhibits 17.11 and 17.12 present a partial set of financial statements of Chicago Corporation for 2013, including a consolidated statement of income and retained earnings for 2013 and consolidated com...

Q: Burton Corporation commenced retailing operations on January 1, 2011. Purchases

Burton Corporation commenced retailing operations on January 1, 2011. Purchases of merchandise inventory during 2011 and 2012 appear next: Burton Corporation sold 1,000 units during 2011 and 1,500 u...

Q: Hanover Oil Products (HOP) operates a gasoline outlet. It

Hanover Oil Products (HOP) operates a gasoline outlet. It commenced operations on January 1. It prices its gasoline at 10% above its average purchase price for gasoline. Purchases of gasoline during J...

Q: Burch Corporation began a merchandising business on January 1, 2010.

Burch Corporation began a merchandising business on January 1, 2010. It acquired merchandise costing $100,000 in 2010, $125,000 in 2011, and $135,000 in 2012. Information about Burch Corporationâ...

Q: Wilson Company sells chemical compounds made from expensium. The company has

Wilson Company sells chemical compounds made from expensium. The company has used a LIFO inventory flow assumption for many years. The inventory of expensium on December 31, 2012, comprised 4,000 poun...

Q: Refer to the information in Problem 40 concerning Sedan Corporation’s inventory for

Refer to the information in Problem 40 concerning Sedan Corporation’s inventory for the years ended March 31, 2013 and 2012. The notes to Sedan’s financial statemen...

Q: Harmon Corporation commenced operations on January 1, 2011. It uses

Harmon Corporation commenced operations on January 1, 2011. It uses a LIFO cost-flow assumption. Its purchases and sales for the first three years of operations appear next: a. Compute the amount of...

Q: Assume no changes in physical quantities during the period. During a

Assume no changes in physical quantities during the period. During a period of rising purchase prices, will a FIFO or a LIFO cost-flow assumption result in the higher ending inventory balance sheet ca...

Q: Cat Incorporated manufactures machinery and engines for the construction, agriculture,

Cat Incorporated manufactures machinery and engines for the construction, agriculture, and forestry industries. It follows U.S. GAAP and reports its results in millions of U.S. dollars ($). For the ye...

Q: Falcon Motor Company, a U.S. automotive manufacturer,

Falcon Motor Company, a U.S. automotive manufacturer, reports that it uses the LIFO cost-flow assumption for inventory. For the year ended December 31, 2013, Falcon’s cost of goods s...

Q: The following note related to accounting for inventory was taken from the

The following note related to accounting for inventory was taken from the 2016 annual report of Wal-Mart Stores, Inc.: Inventories The Company values inventories at the lower of cost or market as dete...

Q: The accounting records of Wall’s China Shop reflected the following balances as

The accounting records of Wall’s China Shop reflected the following balances as of January 1, Year 2: The following five transactions occurred in Year 2: 1. First purchase (cash):...

Q: The accounting records of Allen Insulation, Inc. reflected the following

The accounting records of Allen Insulation, Inc. reflected the following balances as of January 1, Year 2: The following five transactions occurred in Year 2: 1. First purchase (cash) â€&...

Q: The following information is available for Leno Company: /

The following information is available for Leno Company: Leno Company currently uses the FIFO cost flow method for financial statement reporting and tax reporting. It is considering changing to the...

Q: Clair Coolage is the chief accountant for a sales company called Far

Clair Coolage is the chief accountant for a sales company called Far Eastern Imports. The company has been highly successful and is trying to increase its capital base by attracting new investors. The...

Q: The accounting records of Blue Bird Co. showed the following balances

The accounting records of Blue Bird Co. showed the following balances at January 1, Year 2: Transactions for Year 2 were as follows: Required: a. Organize the class into three sections, and divide...

Q: The Brick Company had cash sales of $280,000 for

The Brick Company had cash sales of $280,000 for Year 1, its first year of operation. On April 2, the company purchased 210 units of inventory at $390 per unit. On September 1, an additional 160 units...

Q: The following information related to accounting for inventory was taken from the

The following information related to accounting for inventory was taken from the 2016 annual report of Costco Wholesale Corporation: Merchandise inventories consist of the following at the end of 2016...

Q: Generally accepted accounting principles (GAAP) and International Financial Reporting Standards

Generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) treat the LIFO inventory cost flow method differently. Required: a. Briefly describe the positio...

Q: The Shirt Shop had the following transactions for T-shirts for

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: During the year, The Shirt Shop sold 810 T-shirts for $20 each. Required: a. Compute the amount...

Q: Scott Sales had the following transactions for jackets in Year 1,

Scott Sales had the following transactions for jackets in Year 1, its first year of operations: During the year, Scott Sales sold 830 jackets for $40 each. Required: a. Compute the amount of ending...

Q: Home Gifts Inc. had cash sales of $112,500

Home Gifts Inc. had cash sales of $112,500 for Year 1, its first year of operation. On April 2, the company purchased 150 units of inventory at $180 per unit. On September 1, an additional 200 units w...

Q: Nash Auto Parts, Inc. had the following transactions for Year

Nash Auto Parts, Inc. had the following transactions for Year 2: Required: a. Determine the quantity and dollar amount of inventory at the end of the year, assuming Nash Auto Parts, Inc. uses the FI...

Q: The inventory records of Cushing, Inc., reflected the following information

The inventory records of Cushing, Inc., reflected the following information for the year ended December 31, 2010:Required:a. Assume that Cushing, Inc., uses a periodic inventory system. Calculate cost...

Q: At January 1, Year 2, the accounting records of Ginger’s

At January 1, Year 2, the accounting records of Ginger’s Boutique had the following balances:During January, Ginger’s Boutique entered into five cash transactions:1...

Q: Below is the Retained Earnings account for the year 2017 for Acadian

Below is the Retained Earnings account for the year 2017 for Acadian Corp. Instructions a. Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type ment...

Q: The adjusted trial balance of Eastwood Company and other related information for

The adjusted trial balance of Eastwood Company and other related information for the year 2017 are presented as follows. Additional information: 1. The LIFO method of inventory value is used. 2. T...

Q: The following independent situations relate to inventory accounting. 1. Kim

The following independent situations relate to inventory accounting. 1. Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowab...

Q: Presented below is information related to Kaisson Corporation for the last 3

Presented below is information related to Kaisson Corporation for the last 3 years. Instructions Compute the ending inventories under the dollar-value LIFO method for 2016, 2017, and 2018. The base...

Q: Richardson Company cans a variety of vegetable-type soups. Recently

Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not underst...

Q: The management of Tritt Company has asked its accounting department to describe

The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventori...

Q: Norman’s Televisions produces television sets in three categories: portable, midsize

Norman’s Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2017, Norman adopted dollar-value LIFO and decided to use a singl...

Q: On January 1, 2017, Bonanza Wholesalers Inc. adopted the

On January 1, 2017, Bonanza Wholesalers Inc. adopted the dollar-value LIFO inventory method for income tax and external financial reporting purposes. However, Bonanza continued to use the FIFO invento...

Q: Describe the LIFO double-extension method. Using the following information

Describe the LIFO double-extension method. Using the following information, compute the index at December 31, 2017, applying the double-extension method to a LIFO pool consisting of 25,500 units of pr...

Q: On December 31, 2016, the inventory of Powhattan Company amounts

On December 31, 2016, the inventory of Powhattan Company amounts to $800,000. During 2017, the company decides to use the dollar-value LIFO method of costing inventories. On December 31, 2017, the inv...

Q: Explain the following terms. a. LIFO layer.

Explain the following terms. a. LIFO layer. b. LIFO reserve. c. LIFO effect.

Q: The Kroger Company reported the following data in its annual report (

The Kroger Company reported the following data in its annual report (in millions). Instructions a. Compute Kroger’s inventory turnovers for fiscal years ending January 31, 2015, a...

Q: Harrisburg Company is considering changing its inventory valuation method from FIFO to

Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, management wishes to consider all of the effects on the compa...

Q: In January 2017, Susquehanna Inc. requested and secured permission from

In January 2017, Susquehanna Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in, first-out (LIFO) method and elected t...

Q: Midori Company had ending inventory at end-of-year prices

Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2016; $119,900 at December 31, 2017; and $134,560 at December 31, 2018. The year-end price indexes were 100 at 12/...

Q: Oasis Company has used the dollar-value LIFO method for inventory

Oasis Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Oasis’ records. Instructions Calculate...

Q: Johnny Football Shop began operations on January 2, 2017. The

Johnny Football Shop began operations on January 2, 2017. The following stock record card for footballs was taken from the records at the end of the year. A physical inventory on December 31, 2017, r...

Q: The dollar-value LIFO method was adopted by Enya Corp.

The dollar-value LIFO method was adopted by Enya Corp. on January 1, 2017. Its inventory on that date was $160,000. On December 31, 2017, the inventory at prices existing on that date amounted to $140...

Q: Presented below is information related to Dino Radja Company.

Presented below is information related to Dino Radja Company. Instructions Compute the ending inventory for Dino Radja Company for 2014 through 2019 using the dollar-value LIFO method.

Q: The following information relates to the Jimmy Johnson Company.

The following information relates to the Jimmy Johnson Company. Instructions Use the dollar-value LIFO method to compute the ending inventory for Johnson Company for 2013 through 2017.

Q: Trout Company uses the LIFO method for financial reporting purposes but FIFO

Trout Company uses the LIFO method for financial reporting purposes but FIFO for internal reporting purposes. At January 1, 2017, the LIFO reserve has a credit balance of $1,300,000. At December 31, 2...

Q: Arna, Inc. uses the dollar-value LIFO method of

Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow. Compute the value of the 2017 and 2018 inventories using the dollar-value LIFO method.

Q: Keller Company began operations on January 1, 2016, adopting the

Keller Company began operations on January 1, 2016, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2016 and, because there wa...

Q: Leonard Company began operations late in 2016 and adopted the conventional retail

Leonard Company began operations late in 2016 and adopted the conventional retail inventory method. Because there was no beginning inventory for 2016 and no markdowns during 2016, the ending inventory...

Q: You assemble the following information for Seneca Department Store, which computes

You assemble the following information for Seneca Department Store, which computes its inventory under the dollar-value LIFO method. Instructions: Compute the cost of the inventory on December 31,...

Q: Amiras Corporation began operations on January 1, 2017, with a

Amiras Corporation began operations on January 1, 2017, with a beginning inventory of $30,100 at cost and $50,000 at retail. The following information relates to 2017....

Q: Connie Chung Corporation adopted the dollar-value LIFO retail inventory method

Connie Chung Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2016. At that time the inventory had a cost of $54,000 and a retail price of $100,000. The following inform...

Q: As of January 1, 2017, Aristotle Inc. adopted the

As of January 1, 2017, Aristotle Inc. adopted the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2017, you obtain...

Q: Diderot Stores Inc., which uses the conventional retail inventory method,

Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2017. Amounts as shown below...

Q: Davenport Department Store converted from the conventional retail method to the LIFO

Davenport Department Store converted from the conventional retail method to the LIFO retail method on January 1, 2017, and is now considering converting to the dollar-value LIFO inventory method. Duri...

Q: Kumar Inc. uses LIFO inventory costing. At January 1,

Kumar Inc. uses LIFO inventory costing. At January 1, 2017, inventory was $214,000 at both cost and market value. At December 31, 2017, the inventory was $286,000 at cost and $265,000 at market value....

Q: Steele Corporation purchased a significant amount of raw materials inventory for a

Steele Corporation purchased a significant amount of raw materials inventory for a new product that it is manufacturing. Steele uses the lower-of-average-cost-or-net realizable value (LCNRV) rule for...

Q: Presented below is information related to Langston Hughes Corporation.

Presented below is information related to Langston Hughes Corporation. Instructions: Compute the ending inventory under the dollar-value LIFO method at December 31, 2018. The cost-to-retail ratio f...

Q: Robots, Inc. reported the following information regarding 2016–2017

Robots, Inc. reported the following information regarding 2016–2017 inventory. Instructions a. Comment on why Robots, Inc., might disclose how its LIFO inventories would be valued...

Q: Various types of accounting changes can affect the financial statements of a

Various types of accounting changes can affect the financial statements of a business enterprise differently. Assume that the following list describes changes that have a material effect on the financ...

Q: Presented below are income statements prepared on a LIFO and FIFO basis

Presented below are income statements prepared on a LIFO and FIFO basis for Kenseth Company, which started operations on January 1, 2016. The company presently uses the LIFO method of pricing its inve...

Q: Mathys Inc. has recently hired a new independent auditor, Karen

Mathys Inc. has recently hired a new independent auditor, Karen Ogleby, who says she wants “to get everything straightened out.” Consequently, she has proposed the following accounting changes in conn...

Q: Below is the net income of Anita Ferreri Instrument Co., a

Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. Instructions (Ignore tax considerations.) a. Ass...

Q: Taveras Co. decides at the beginning of 2017 to adopt the

Taveras Co. decides at the beginning of 2017 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2015, and had m...

Q: The management of Utrillo Instrument Company had concluded, with the concurrence

The management of Utrillo Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Utrillo changed its method of...

Q: Shannon, Inc., changed from the LIFO cost flow assumption to

Shannon, Inc., changed from the LIFO cost flow assumption to the FIFO cost flow assumption in 2017. The increase in the prior year’s income before taxes is $1,200,000. The tax rate is 40%. Prepare Sha...

Q: Holder-Webb Company began operations on January 1, 2015,

Holder-Webb Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following inform...

Q: In preparation for significant expansion of its international operations, ABC Co

In preparation for significant expansion of its international operations, ABC Co. has adopted a plan to gradually shift to the same accounting methods as used by its international competitors. Part of...

Q: Botticelli Inc. was organized in late 2015 to manufacture and sell

Botticelli Inc. was organized in late 2015 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported n...

Q: Explain how the choice of FIFO versus LIFO can affect a firm’s

Explain how the choice of FIFO versus LIFO can affect a firm’s balance sheet and income statement?

Q: What is the difference between FIFO and LIFO accounting?

What is the difference between FIFO and LIFO accounting?

Q: Match the items in the left-hand column with the descriptions

Match the items in the left-hand column with the descriptions/explanations in the right-hand column.

Q: Select the correct answer for each of the following questions.

Select the correct answer for each of the following questions. 1. Which of the following is an inherent difficulty in determining the results of operations on an interim basis? a. Cost of sales refle...

Q: Lawrence owns a small candy store that sells one type of candy

Lawrence owns a small candy store that sells one type of candy. His beginning inventory of candy was made up of 10,000 boxes costing $1.50 per box ($15,000), and he made the following purchases of can...

Q: For each of the following independent situations, indicate the reason for

For each of the following independent situations, indicate the reason for and the type of financial statement audit report that you would issue. Assume that each item is at least material. a. Thibodea...

Q: Devon, Inc., engaged Rao to examine its financial statements for

Devon, Inc., engaged Rao to examine its financial statements for the year ended December 31, 2018. The financial statements of Devon, Inc., for the year ended December 31, 2017, were examined by Jones...

Q: Darnell Equipment Company uses the LIFO method of valuation for part of

Darnell Equipment Company uses the LIFO method of valuation for part of its inventories and weighted-average cost for another portion. Would you be willing to issue an unqualified opinion under these...

Q: This simulation, also available online, presents an Analytical Procedures/

This simulation, also available online, presents an Analytical Procedures/Risk Assessment Analysis document prepared by two members of your audit team—your responsibility is to evalu...

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For each of the following brief scenarios, assume that you are reporting on a client’s financial statements. Reply as to the type(s) of opinion (per below) possible for the scenario....

Q: Johnson & Barkley, CPAs, audited the consolidated financial statements of

Johnson & Barkley, CPAs, audited the consolidated financial statements of Jordan Company (a public company) for the year ended December 31, 20X7. Johnson & Barkley previously have audited and issued s...

Q: For each of the following brief scenarios, assume that you are

For each of the following brief scenarios, assume that you are the CPA reporting on the financial statements of a nonpublic company. Using the form included with this problem, describe the reporting c...

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Use the following to provide the type of audit report the auditors generally should issue in the situations presented below: 1. Unmodified—standard. 2. Unmodified—with an emphasis-of-matter paragraph....

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Auditors report on the consistency of application of accounting principles. Assume that the following list describes changes that have a material effect on a client’s financial statements for the curr...

Q: / If Leading Edge Frame Shop uses the LIFO method

If Leading Edge Frame Shop uses the LIFO method, cost of goods sold will be a. $27,450. b. $32,850. c. $32,700. d. $32,400.

Q: In a period of rising prices, a. cost of

In a period of rising prices, a. cost of goods sold under LIFO will be less than under FIFO. b. LIFO inventory will be greater than FIFO inventory. c. gross profit under FIFO will be higher than und...

Q: Armed Forces Surplus began March 2016 with 80 tents that cost $

Armed Forces Surplus began March 2016 with 80 tents that cost $15 each. During the month, Armed Forces Surplus made the following purchases at cost: Armed Forces Surplus sold 296 tents, and at March...

Q: The records of Aldrin Aviation include the following accounts for inventory of

The records of Aldrin Aviation include the following accounts for inventory of aviation parts at July 31 of the current year: Requirements 1. Prepare a partial income statement through gross profit...

Q: Military Surplus began May 2016 with 80 stoves that cost $20

Military Surplus began May 2016 with 80 stoves that cost $20 each. During the month, Military Surplus made the following purchases at cost: Military Surplus sold 286 stoves, and at May 31, the endin...

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The records of Buzz Aviation include the following accounts for inventory of aviation parts at July 31 of the current year: Requirements 1. Prepare a partial income statement through gross profit u...

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For each of the situations listed, identify which of three principles (integrity, objectivity, and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all p...

Q: Jubilee Corporation is nearing the end of its first year of operations

Jubilee Corporation is nearing the end of its first year of operations. Jubilee made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units fo...

Q: The inventory costing method a company chooses can affect the financial statements

The inventory costing method a company chooses can affect the financial statements and thus the decisions of the people who use those statements. Requirements 1. Company A uses the LIFO inventory met...

Q: During 2016, Vanguard, Inc., changed to the LIFO method

During 2016, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that during 2015, Vanguard changes back to the FIFO method and the following year Vanguard switches back to...

Q: For each of the following situations, identify the inventory method that

For each of the following situations, identify the inventory method that you would use; or, given the use of a particular method, state the strategy that you would follow to accomplish your goal. a. I...

Q: Suppose Uptown Fashions, a specialty retailer, had these records for

Suppose Uptown Fashions, a specialty retailer, had these records for evening gowns during 2016: Assume that Uptown sold 131 gowns during 2016 and uses the LIFO method to account for inventory. The...

Q: Rollyson Financial Management believes that the biotechnology industry is a good investment

Rollyson Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, FutureNow, Inc., uses the FIFO m...

Q: Use the data for Cranwell Company in E6-18A to answer

Use the data for Cranwell Company in E6-18A to answer the following. Requirements 1. Compute cost of goods sold and ending inventory, using each of the following methods: a. Specifi...

Q: Use the data for Cranwell Company in E6-18A to illustrate

Use the data for Cranwell Company in E6-18A to illustrate Cranwell’s income tax advantage from using LIFO over FIFO. Sales revenue is $7,700, operating expenses are $1,400, and the i...

Q: Spicer Company’s inventory records for the most recent year contain the following

Spicer Company’s inventory records for the most recent year contain the following data: Spicer Company sold a total of 19,100 units during the year. Requirements 1. Using the av...

Q: MusicPlace specializes in sound equipment. Because each inventory item is expensive

MusicPlace specializes in sound equipment. Because each inventory item is expensive, MusicPlace uses a perpetual inventory system. Company records indicate the following data for a line of speakers:...

Q: Suppose a Costco store in Gainesville, Missouri, ended May 2016

Suppose a Costco store in Gainesville, Missouri, ended May 2016 with 1,000,000 units of merchandise that cost $8 each. Suppose the store then sold 100,000 units for $850,000 during June. Further, assu...

Q: Burner & Brett, a partnership, had the following inventory data

Burner & Brett, a partnership, had the following inventory data: Burner & Brett need to know the company’s gross profit percentage and rate of inventory turnover for 2016 u...

Q: Use the data for Arrow Corporation in E6-32B to answer

Use the data for Arrow Corporation in E6-32B to answer the following. Requirements 1. Compute cost of goods sold and ending inventory using each of the following methods: a. Specific...

Q: Use the data for Arrow Corporation in E6-32B to illustrate

Use the data for Arrow Corporation in E6-32B to illustrate Arrow’s income tax advantage from using LIFO over FIFO. Sales revenue is $8,000, operating expenses are $1,400, and the inc...

Q: Calder Company’s inventory records for the most recent year contain the following

Calder Company’s inventory records for the most recent year contain the following data: Calder Company sold a total of 38,000 units during the year. Requirements 1. Using the ave...

Q: MusicMagic.net specializes in sound equipment. Because each inventory item

MusicMagic.net specializes in sound equipment. Because each inventory item is expensive, MusicMagic uses a perpetual inventory system. Company records indicate the following data for a line of speaker...

Q: Suppose a Sam’s Club store in Champaign, Illinois, ended January

Suppose a Sam’s Club store in Champaign, Illinois, ended January 2016 with 800,000 units of merchandise that cost $5.00 each. Suppose the store then sold 100,000 units for $510,000 d...

Q: Thurston & Talty, a partnership, had the following inventory data

Thurston & Talty, a partnership, had the following inventory data: Thurston & Talty need to know the company’s gross profit percentage and rate of inventory...

Q: Determine whether each of the following actions in buying, selling,

Determine whether each of the following actions in buying, selling, and accounting for inventories is ethical or unethical. Give your reason for each answer. 1. In applying the lower-of-cost-or-marke...

Q: McDonough Copy Center sells laser printers and supplies. Assume McDonough Copy

McDonough Copy Center sells laser printers and supplies. Assume McDonough Copy Center started the year with 100 containers of ink (average cost of $8.00 each, FIFO cost of $8.60 each, LIFO cost of $7....

Q: McDonough Copy Center is a corporation subject to a 30% income

McDonough Copy Center is a corporation subject to a 30% income tax. Compute McDonough Copy Center’s income tax expense under the average, FIFO, and LIFO inventory costing methods. Which method would y...

Q: Marley Corporation uses the LIFO method to account for inventory. Marley

Marley Corporation uses the LIFO method to account for inventory. Marley is having an unusually good year, with net income well above expectations. The company’s inventory costs are rising rapidly. Wh...

Q: Using the LIFO method, calculate the cost of ending inventory and

Using the LIFO method, calculate the cost of ending inventory and cost of goods sold for Cowell Corporation.

Q: The statement of income of Bottom, a manufacturing company, for

The statement of income of Bottom, a manufacturing company, for the year ending 31 January 20X2 is as follows: Bottom has used the LIFO method of inventory valuation but the directors wish to assess...

Q: Assume that you are a financial analyst. You are trying to

Assume that you are a financial analyst. You are trying to compare the financial statements of Caterpillar, Inc., with those of CNH Global, an international company that uses international financial r...

Q: In its first month of operations, Weatherall Company made three purchases

In its first month of operations, Weatherall Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $7, and (3) 200 units at $8. Assuming there ar...

Q: The accounting records of Americo Electronics show the following data.

The accounting records of Americo Electronics show the following data. Beginning inventory 3,000 units at $5 Purchases 8,000 units at $7 Sales 9,400 units at $10 Determine cost of goods sold...

Q: Ballas Co. uses a periodic inventory system. Its records show

Ballas Co. uses a periodic inventory system. Its records show the following for the month of May, in which 68 units were sold. Instructions Compute the ending inventory at May 31 and cost of goods s...

Q: Elsa’s Boards sells a snowboard, Xpert, that is popular with

Elsa’s Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Elsa’s purchases of Xpert snowboards during September is...

Q: The management of Danica Co. asks your help in determining the

The management of Danica Co. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2020, the accounting records provide the following data. Invent...

Q: Glee Distribution markets CDs of the performing artist Unique. At the

Glee Distribution markets CDs of the performing artist Unique. At the beginning of October, Glee had in beginning inventory 2,000 of Unique’s CDs with a unit cost of $7. During October, Glee made the...

Q: Sekhon Company had a beginning inventory on January 1 of 160 units

Sekhon Company had a beginning inventory on January 1 of 160 units of Product 4-18-15 at a cost of $20 per unit. During the year, the following purchases were made. Mar. 15 400 units at $23 Sept. 4...

Q: The management of Gresa Inc. is reevaluating the appropriateness of using

The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of op...

Q: Identify the tax and nontax issues that firms must consider in adopting

Identify the tax and nontax issues that firms must consider in adopting the LIFO method of accounting for inventories.

Q: On July 8, Divo Company sold office supplies for $13

On July 8, Divo Company sold office supplies for $13,000. Determine the amount and the character of Divo’s gain or loss on sale under each of the following assumptions: a. Divo is a retail store that...

Q: Refer to the facts in problem 10. In its second year

Refer to the facts in problem 10. In its second year of operations, XYZ manufactured 2,000 units of product and incurred $410,000 direct material cost and $275,000 direct labor costs. For financial st...

Q: Which of the 10 standards is violated in each of the following

Which of the 10 standards is violated in each of the following independent situations? Some situations may violate more than one. a. A team of auditors, each with varying levels of experience, divided...

Q: On January 1, 2020, Bryce Inc. changed from the

On January 1, 2020, Bryce Inc. changed from the LIFO method of inventory pricing to the FIFO method. Explain how this change in accounting principle should be treated in the company’s financial statem...

Q: Is the choice of LIFO a relevant circumstance compared to FIFO?

Is the choice of LIFO a relevant circumstance compared to FIFO?

Q: 1. Assume that three accountants have been selected to measure the

1. Assume that three accountants have been selected to measure the income of a firm under two different income measurement systems. The results for the first income system (M1) were incomes of $3,000,...

Q: 1. The usefulness of accounting data to investors and creditors for

1. The usefulness of accounting data to investors and creditors for predictive purposes is necessarily forward looking. However, under generally accepted accounting principles, financial statements ar...

Q: To what extent should the liquidity measures revisions be considered if LIFO

To what extent should the liquidity measures revisions be considered if LIFO were to be eliminated from U.S. GAAP? Provide examples of those likely measures that would be affected. . As an interesting...

Q: Over the years, the research findings regarding changing from FIFO to

Over the years, the research findings regarding changing from FIFO to LIFO have varied? Why do you suppose this is the case?

Q: At the end of January, Higgins Data Systems had an inventory

At the end of January, Higgins Data Systems had an inventory of 650 units, which cost $16 per unit to produce. During February, the company produced 950 units at a cost of $19 per unit. If the firm so...

Q: At the end of January, Mineral Labs had an inventory of

At the end of January, Mineral Labs had an inventory of 775 units, which cost $12 per unit to produce. During February, the company produced 900 units at a cost of $16 per unit. If the firm sold 1,500...

Q: The Bradley Corporation produces a product with the following costs as of

The Bradley Corporation produces a product with the following costs as of July 1, 20X1: Beginning inventory at these costs on July 1 was 3,250 units. From July 1 to December 1, 20X1, Bradley produce...

Q: Sprint Shoes Inc. had a beginning inventory of 9,250

Sprint Shoes Inc. had a beginning inventory of 9,250 units on January 1, 20X1. Costs associated with the inventory: During 20X1, the firm produced 43,000 units with the following costs: Sales for...

Q: The FIFO method seems more logical than the LIFO method, because

The FIFO method seems more logical than the LIFO method, because it assumes the first merchandise purchased is the first merchandise sold. So, why do many more retailers use LIFO?

Q: ATW corporation currently uses the FIFO method of accounting for its inventory

ATW corporation currently uses the FIFO method of accounting for its inventory for book and tax purposes. Its beginning inventory for the current year was $8,000,000. Its ending inventory for the curr...

Q: Selected transactions completed by Kornett Company during its first fiscal year ended

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 20Y5, were as follows: Jan. 3. Issued a check to establish a petty cash...

Q: Cambosa Ltd. operates in an industry where the prices of merchandise

Cambosa Ltd. operates in an industry where the prices of merchandise purchased for resale are continuously rising. Cambosa’s choice of accounting policy for inventory costing has a significant impact...

Q: Pace Instrument Corp., a small company that follows ASPE, began

Pace Instrument Corp., a small company that follows ASPE, began operations on January 1, 2014, and uses a periodic inventory system. The following net income amounts were calculated for Pace under thr...

Q: Amber Auto Parts adopted the dollar-va1ue LIFO inventory method.

Amber Auto Parts adopted the dollar-va1ue LIFO inventory method. The company has consistently used a retail price index when it should have used a producer's. As a resu1t, its LIFO layers have been co...

Q: Opal, 1nc., is about to make its first attempt to

Opal, 1nc., is about to make its first attempt to borrow from a local bank. The company uses LIFO for tax purposes, solely to defer taxes, and believes that income computed using the FIFO method would...

Q: In 2018, Gail changed from the lower of cost or market

In 2018, Gail changed from the lower of cost or market FIFO method to the LIFO inventory method. The ending inventory for 2017 was computed as follows: Item C was damaged goods, and the replacement...

Q: At the end of 2019, Magenta Manufacturing Company discovered that construction

At the end of 2019, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2014 when it should have been treated as a cost of product...

Q: Amber Company has used the dollar-value LIFO technique for the

Amber Company has used the dollar-value LIFO technique for the past three years. The company has only one inventory pool. Its beginning inventory for the current year was computed as follows: a. The...

Q: More than one president and others have called for repeal of the

More than one president and others have called for repeal of the LIFO method for tax purposes. Conduct an internet search to find arguments for and against this proposal. Prepare a summary of these ar...

Q: Shondee Corporation uses the lower of cost or market and FIFO inventory

Shondee Corporation uses the lower of cost or market and FIFO inventory methods. At the end of 2017, the FIFO cost of the ending inventory was $181,000, and the market value of the inventory was $160,...

Q: On February 17, 2019, a CPA completed all the evidence

On February 17, 2019, a CPA completed all the evidence gathering procedures on the audit of the financial statements for the Buckheizer Technology Corporation for the year ended December 31, 2019. The...

Q: The client changed from FIFO to LIFO inventory valuation in the current

The client changed from FIFO to LIFO inventory valuation in the current year and reflected this change in their financial statements. How should this be reflected in the auditor’s report?

Q: Selected transactions completed by Kornett Company during its first fiscal year ended

Selected transactions completed by Kornett Company during its first fiscal year ended December 31, 2016, were as follows: Jan. 3. Issued a check to establish a petty cash fund of $4,500. Feb. 26. Repl...

Q: The beginning inventory for Funky Party Supplies and data on purchases and

The beginning inventory for Funky Party Supplies and data on purchases and sales for a three-month period are shown in Problem 6-1A. Problem 6-1A: The beginning inventory at Funky Party Supplies and...

Q: The beginning inventory for Dunne Co. and data on purchases and

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 6-1B. Problem 6-1B: The beginning inventory of merchandise at Dunne Co. and data o...

Q: Pace Instrument Corp., a small company that follows ASPE, began

Pace Instrument Corp., a small company that follows ASPE, began operations on January 1, 2017, and uses a periodic inventory system. The following net income amounts were calculated for Pace under thr...

Q: Sparrow Corporation (a calendar year, accrual basis taxpayer) had

Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2018, it5 second year of operation. Sparrow uses the LIFO inventory method, and its LIFO recapture amo...

Q: As a trainee accountant, you have been asked to determine the

As a trainee accountant, you have been asked to determine the monetary value that should be assigned to the inventory of sporting equipment on hand as at the end of the financial year for Outdoor Adve...

Q: Under the last-in, first-out (LIFO)

Under the last-in, first-out (LIFO) inventory valuation method, a price index for inventory must be established for tax purposes. The quantity weights are based on year-ending inventory levels. Use th...

Q: Refer to the data for E5-28B. However, instead

Refer to the data for E5-28B. However, instead of the FIFO method, assume Tee Time, Inc., uses the LIFO method. Requirements 1. Prepare a perpetual inventory record for the putters on the LIFO basis...

Q: This continues our accounting for Fitness Equipment Doctor, Inc. As

This continues our accounting for Fitness Equipment Doctor, Inc. As stated in the Continuing Problem in Chapter 4, Fitness Equipment Doctor, Inc., began selling gym equipment in June. For this problem...

Q: Inland Equipment Sales, Inc., sells hand-held engine analyzers

Inland Equipment Sales, Inc., sells hand-held engine analyzers to automotive service shops. Inland Equipment Sales, Inc., started November with an inventory of 55 units that cost a total of $8,470. Du...

Q: Refer to the data for Inland Equipment Sales, Inc., in

Refer to the data for Inland Equipment Sales, Inc., in P5-40A. However, assume Inland Equipment Sales, Inc., uses the average cost method. Requirements 1. Prepare a perpetual inventory record using a...

Q: Mid Valley Sporting Goods, Inc., uses the LIFO inventory method

Mid Valley Sporting Goods, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Mid Valley Sporting Goods, Inc., has the following account balanc...

Q: Star Equipment, Inc., sells hand-held engine analyzers to

Star Equipment, Inc., sells hand-held engine analyzers to automotive service shops. Star Equipment, Inc., started April with an inventory of 75 units that cost a total of $10,500. During the month, St...

Q: Refer to the data for Star Line Equipment, Inc., in

Refer to the data for Star Line Equipment, Inc., in P5-48B. However, assume Star Equipment, Inc., uses the average cost method. Requirements 1. Prepare a perpetual inventory record using average cost...

Q: Titan Truck Parts, Inc., uses the LIFO inventory method and

Titan Truck Parts, Inc., uses the LIFO inventory method and values its inventory using the lower-of-cost-or-market (LCM) rule. Titan Truck Parts, Inc., has the following account balances at December 3...

Q: Assume Bob’s Boards has the following LIFO perpetual inventory record for skateboards

Assume Bob’s Boards has the following LIFO perpetual inventory record for skateboards for the month of March: At March 31, the accountant for Bob’s Boards determi...

Q: The Excel worksheet form that appears below is to be used to

The Excel worksheet form that appears below is to be used to recreate portions of Review Problem 1 relating to Dexter Corporation. The workbook, and instructions on how to complete the file, can be fo...

Q: You are provided with the following financial statement information from Nimrod Inc

You are provided with the following financial statement information from Nimrod Inc. for its most recent fiscal year: The statement of income for the company for the year just ended is as follows:...

Q: Refer to Problem 19-44 for reported financial statement data for

Refer to Problem 19-44 for reported financial statement data for Nimrod Inc. Required: 1. Using the financing approach, prepare an estimate of EVA® NOPAT (to the nearest whole dollar). In...

Q: In 2021, Gail changed from the lower of cost or market

In 2021, Gail changed from the lower of cost or market FIFO method to the LIFO inventory method. The ending inventory for 2020 was: Item C was damaged goods, and the replacement cost used was actually...

Q: Shondee Corporation uses the lower of cost or market and FIFO inventory

Shondee Corporation uses the lower of cost or market and FIFO inventory methods. At the end of 2020, the FIFO cost of the ending inventory was $181,000, and the market value of the inventory was $160,...

Q: Until the end of year 0, Magic Carpets (MC)

Until the end of year 0, Magic Carpets (MC) was a C corporation with a calendar year. At the beginning of year 1 it elected to be taxed as an S corporation. MC uses the LIFO method to value its invent...

Q: Barry Potter and Winnie Weasley are considering making an S election on

Barry Potter and Winnie Weasley are considering making an S election on March 1, 2020, for their C corporation, Omniocular. However, first they want to consider the implications of the following infor...

Q: Shepard Company sold 4,000 units of its product at $

Shepard Company sold 4,000 units of its product at $100 per unit during the year and incurred operating expenses of $15 per unit in selling the units. It began the year with 840 units in inventory and...

Q: Refer to the information in QS 5-5 and assume the

Refer to the information in QS 5-5 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per unit...

Q: Golf Challenge Corp. is a retail sports store carrying golf apparel

Golf Challenge Corp. is a retail sports store carrying golf apparel and equipment. The store is at the end of its second year of operation and is struggling. A major problem is that its cost of invent...

Q: Refer to the information in QS 5-11 and assume the

Refer to the information in QS 5-11 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method.

Q: Complete the following table by indicating whether FIFO or LIFO results in

Complete the following table by indicating whether FIFO or LIFO results in the lower reported amount for each of the three accounting measures.

Q: Cruz Company uses LIFO for inventory costing and reports the following financial

Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes. 1. Compute its current ra...

Q: QP Corp. sold 4,000 units of its product at

QP Corp. sold 4,000 units of its product at $50 per unit during the year and incurred operating expenses of $5 per unit in selling the units. It began the year with 700 units in inventory and made suc...

Q: Refer to the information in QS 5-11 and assume the

Refer to the information in QS 5-11 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method.

Q: R and A are brothers. Recently, their aunt died leaving

R and A are brothers. Recently, their aunt died leaving them €1,000 each. Initially, they intended setting up in partnership selling pils and lager. However, R felt that there was no future in the lag...

Q: Brian Ltd starts selling footballs in 20X8. Although each ball looks

Brian Ltd starts selling footballs in 20X8. Although each ball looks the same, the unit cost of manufacture (which is done in batches) has fluctuated during the period. Details of the costs are as fol...

Q: Your company sells, for £275 each unit, a product

Your company sells, for £275 each unit, a product that it purchases from several different manufacturers, all charging different prices. The manufacturers deliver at the beginning of each...

Q: Jones Corporation switched from the LIFO method of costing inventories to the

Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 20X1. The LIFO inventory at the end of 20X0 would have been $80,000 higher using FIFO. Rep...

Q: The following information related to Caterpillar’s inventories is taken from its 2015

The following information related to Caterpillar’s inventories is taken from its 2015 annual report. Use this information in answering the questions that follow. There were no LIFO l...

Q: KW Steel Corp. uses the LIFO method of inventory valuation.

KW Steel Corp. uses the LIFO method of inventory valuation. Waretown Steel, KW’s major competitor, instead uses the FIFO method. The following are excerpts from each companyâ&#...

Q: Nathan’s Grills, Inc., imports and sells premium-quality gas

Nathan’s Grills, Inc., imports and sells premium-quality gas grills. The company had the following layers in its LIFO inventory at January 1, 20X4, at which time the replacement cost...

Q: The following information related to Exxon Mobil’s inventories is taken from its

The following information related to Exxon Mobil’s inventories is taken from its 2017 annual report. Required: 1. By how much would net income for 2017 have differed had Exxon Mobil...

Q: Acute Company manufactures a single product. On December 31, 20X0

Acute Company manufactures a single product. On December 31, 20X0, it adopted the dollar- value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was deter...

Q: On December 31, 20X1, Fern Company adopted the dollar-

On December 31, 20X1, Fern Company adopted the dollar-value LIFO inventory method. All of Fern’s inventories constitute a single pool. The inventory on December 31, 20X1, using the d...

Q: Jessica’s Office Supply, Inc., had 300 calculators on hand at

Jessica’s Office Supply, Inc., had 300 calculators on hand at January 1, 20X1, costing $16 each. Purchases and sales of calculators during the month of January were as follows: Jessi...

Q: For several years, the Securities and Exchange Commission (SEC)

For several years, the Securities and Exchange Commission (SEC) has been considering whether to transition U.S. firms to International Financial Reporting Standards (IFRS) for filing public financial...

Q: Barden, Inc., operates a retail chain that specializes in baby

Barden, Inc., operates a retail chain that specializes in baby clothes and accessories that are made to its specifications by a number of overseas manufacturers. Barden began operations 20 years ago a...

Q: Keefer, Inc., began business on January 1, 20X1.

Keefer, Inc., began business on January 1, 20X1. Information on its inventory purchases and sales during 20X1 and 20X2 follow: Required: 1. Calculate ending inventory, cost of goods sold, and gross m...

Q: The following is an excerpt from the financial statements of Talbot Industries

The following is an excerpt from the financial statements of Talbot Industries (a fictional company): During 20X2, Chaney Technologies (a fictional company) changed its inventory cost flow assumption...

Q: JKW Corporation (a fictional company) has been selling plumbing supplies

JKW Corporation (a fictional company) has been selling plumbing supplies since 1981. In 2003, the company adopted the LIFO method of valuing its inventory. The company has grown steadily over the year...

Q: Bourne Company (a fictional company) has the following inventory note

Bourne Company (a fictional company) has the following inventory note in its 20X3 annual report. LIFO revaluations decreased $140 million in 20X3, compared with decreases of $169 million in 20X2 and $...

Q: Sirotka Retail Company began doing business in 20X1. The following information

Sirotka Retail Company began doing business in 20X1. The following information pertains to its first three years of operation: Assume the following: • The income tax rate is 21%. &ac...

Q: Caldwell Corporation (a fictional company) operates an ice cream processing

Caldwell Corporation (a fictional company) operates an ice cream processing plant and uses the FIFO inventory cost flow assumption. A partial income statement for the year ended December 31, 20X2, fol...

Q: Ramps by Jake, Inc., manufactures skateboard ramps. The company

Ramps by Jake, Inc., manufactures skateboard ramps. The company uses independent sales representatives to market its products and pays a commission of 8% on each sale. Data regarding the five styles o...

Q: Bravo Wholesalers, Inc., began its business on January 1,

Bravo Wholesalers, Inc., began its business on January 1, 20X1. Information on its inventory purchases and sales during 20X1 follows: Assume a tax rate of 21%. Required: 1. Compute the cost of ending...

Q: Princess Retail Stores started doing business on January 1, 20X1.

Princess Retail Stores started doing business on January 1, 20X1. The following data reflect its inventory purchases and sales during the year: Required: 1. Compute gross margin and cost of ending in...

Q: Packard, Inc., adopted the dollar-value LIFO inventory method

Packard, Inc., adopted the dollar-value LIFO inventory method on June 30, 20X1, the end of its fiscal year. Packard’s inventory records provide the following information: Required:...

Q: Neville Company decides at the beginning of 20X3 to adopt the FIFO

Neville Company decides at the beginning of 20X3 to adopt the FIFO method of inventory valuation. It had used the LIFO method for financial reporting since its inception on January 1, 20X1, and had ma...

Q: Smith-Kline Company maintains inventory records at selling prices as well

Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2021, the records indicate the following data: Required: Assuming the price level increased from 1.00 at Janua...

Q: On January 1, 2021, HGC Camera Store adopted the dollar

On January 1, 2021, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows: Required:...

Q: Raleigh Department Store uses the conventional retail method for the year ended

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows: a. The inventory at January 1, 2019, had a retail value of $45,000 and...

Q: On January 1, 2021, Pet Friendly Stores adopted the retail

On January 1, 2021, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2021 and 2022 are as follows: Required: 1. Estimate th...

Q: Alquist Company uses the retail method to estimate its ending inventory.

Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2021 operations is as follows: a. January 1, 2021, beginning inventory had a cost of $100,0...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its...

Q: The Pyramid Company has used the LIFO method of accounting for inventory

The Pyramid Company has used the LIFO method of accounting for inventory during its first two years of operation, 2019 and 2020. At the beginning of 2021, Pyramid decided to change to the average cost...

Q: Shown below are net income amounts as they would be determined by

Shown below are net income amounts as they would be determined by Weihrich Steel Company by each of three different inventory costing methods ($ in thousands). Required: 1. Assume that Weihrich used F...

Q: Fantasy Fashions had used the LIFO method of costing inventories, but

Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2021 decided to change to the FIFO method. The inventory as reported at the end of 2020 using LIFO would have...

Q: Described below are six independent and unrelated situations involving accounting changes.

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax...

Q: In 2021, J J Dishes changed its method of valuing inventory

In 2021, J J Dishes changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2020, J J’s inventories were $96 million (FIFO). J J’s records were insufficient to...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This mate...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 3, 2018, are available in Connect. This mate...

Q: In 2020, the Moncrief Company purchased from Jim Lester the right

In 2020, the Moncrief Company purchased from Jim Lester the right to be the sole distributor in the western states of a product called Zelenex. In payment, Moncrief agreed to pay Lester 20% of the gro...

Q: Income statement and balance sheet information abstracted from a recent annual report

Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Inc., appears below: The significant accounting policies note disclosure contained the fo...

Q: Fred’s Inc. operates general merchandise retail discount stores and full-

Fred’s Inc. operates general merchandise retail discount stores and full-service pharmacies in the Southeastern United States. Access the company’s 10-K for the fiscal year ended January 28, 2017. You...

Q: Mayfair Department Stores, Inc., operates over 30 retail stores in

Mayfair Department Stores, Inc., operates over 30 retail stores in the Pacific Northwest. Prior to 2021, the company used the FIFO method to value its inventory. In 2021, Mayfair decided to switch to...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2007 by two talented engineers with little business training. In 2021, the company was acquired by one of its...

Q: You are in your second year as an auditor with Dantly and

You are in your second year as an auditor with Dantly and Regis, a regional CPA firm. One of the firm’s longtime clients is Mayberry-Cleaver Industries, a national company involved in the manufacturin...

Q: Webster Products, Inc., adopted the dollar-value LIFO method

Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2021. Webster continues to use the FIFO method for inte...

Q: Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest

Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest. Prior to 2021, the company used the FIFO method to value its inventory. In 2021, Mayfair decided to switch to the dol...

Q: Late one Thursday afternoon, Joy Martin, a veteran audit manager

Late one Thursday afternoon, Joy Martin, a veteran audit manager with a regional CPA firm, was reviewing documents for a long-time client of the firm, AMT Transport. The year-end audit was scheduled t...

Q: Ray Solutions decided to make the following changes in its accounting policies

Ray Solutions decided to make the following changes in its accounting policies on January 1, 2021: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service co...

Q: Aquatic Equipment Corporation decided to switch from the LIFO method of costing

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2021. The inventory as reported at the end of 2020 using LIFO would h...

Q: Flay Foods has always used the FIFO inventory costing method for both

Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Flay decided to change to the LIFO method. As a result of the chan...

Q: Wolfgang Kitchens has always used the FIFO inventory costing method for both

Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income i...

Q: Alta Ski Company’s inventory records contained the following information regarding its latest

Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Required: 1. Which method, FIFO...

Q: Causwell Company began 2021 with 10,000 units of inventory on

Causwell Company began 2021 with 10,000 units of inventory on hand. The cost of each unit was $5.00. During 2021, an additional 30,000 units were purchased at a single unit cost, and 20,000 units rema...

Q: To more efficiently manage its inventory, Treynor Corporation maintains its internal

To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information re...

Q: Tipton Processing maintains its internal inventory records using average cost under a

Tipton Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year: Jan. 1: Inventory...

Q: AmerisourceBergen is an American drug wholesale company. The company uses the

AmerisourceBergen is an American drug wholesale company. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following disclosure note...

Q: The Reuschel Company began 2021 with inventory of 10,000 units

The Reuschel Company began 2021 with inventory of 10,000 units at a cost of $7 per unit. During 2021, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000...

Q: The Churchill Corporation uses a periodic inventory system and the LIFO inventory

The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 20,000 units consisted of the following, listed in chronologic...

Q: Access the FASB Accounting Standards Codification at the FASB website (www

Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine each of the following: 1. The specific nine-digit Codification citation (XXX-XX-XXX-X) that describes th...

Q: On January 1, 2021, the Haskins Company adopted the dollar

On January 1, 2021, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool. The pool’s value on this date was $660,000. The 2021 and 2022 ending inventory valued at year-e...

Q: Mercury Company has only one inventory pool. On December 31,

Mercury Company has only one inventory pool. On December 31, 2021, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $200,000. I...

Q: On January 1, 2021, Displays Incorporated had the following account

On January 1, 2021, Displays Incorporated had the following account balances: From January 1 to December 31, the following summary transactions occurred: a. Purchased inventory on account for $330,000...

Q: Crosby Company owns a chain of hardware stores throughout the state.

Crosby Company owns a chain of hardware stores throughout the state. The company uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. T...

Q: Adams Corporation uses a periodic inventory system and the retail inventory method

Adams Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September 2021...

Q: On January 1, 2021, the Brunswick Hat Company adopted the

On January 1, 2021, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2021: Required: Calculate the estimated ending inventory and cost of goo...

Q: Canova Corporation adopted the dollar-value LIFO retail method on January

Canova Corporation adopted the dollar-value LIFO retail method on January 1, 2021. On that date, the cost of the inventory on hand was $15,000 and its retail value was $18,750. Information for 2021 an...

Q: Lance-Hefner Specialty Shoppes decided to use the dollar-value

Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information: Related retail price indexes are as foll...

Q: Bosco Company adopted the dollar-value LIFO retail method at the

Bosco Company adopted the dollar-value LIFO retail method at the beginning of 2021. Information for 2021 and 2022 is as follows, with certain data intentionally omitted: Required: Determine the missin...

Q: Refer to the situation described in BE 8–8. Assuming

Refer to the situation described in BE 8–8. Assuming an income tax rate of 25%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial st...

Q: King Supply maintains its internal inventory records using perpetual FIFO, but

King Supply maintains its internal inventory records using perpetual FIFO, but for financial reporting purposes, reports ending inventory and cost of goods sold using periodic LIFO. At the beginning o...

Q: Walgreens Boots Alliance, Inc., reported inventories of $8,

Walgreens Boots Alliance, Inc., reported inventories of $8,899 million and $8,956 million in its August 31, 2017, and August 31, 2016, balance sheets, respectively. Cost of goods sold for the year end...

Q: At the beginning of 2021, a company adopts the dollar-

At the beginning of 2021, a company adopts the dollar-value LIFO inventory method for its one inventory pool. The pool’s value on that date was $1,400,000. The 2021 ending inventory valued at year-end...

Q: Esquire Inc. uses the LIFO method to report its inventory.

Esquire Inc. uses the LIFO method to report its inventory. Inventory at January 1, 2021, was $500,000 (20,000 units at $25 each). During 2021, 80,000 units were purchased, all at the same price of $30...

Q: On January 1, 2021, Sanderson Variety Store adopted the dollar

On January 1, 2021, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records provided the following information: Estimate ending inventory using the dollar-val...

Q: This exercise is a continuation of BE 9–11. During

This exercise is a continuation of BE 9–11. During 2022, purchases at cost and retail were $168,000 and $301,000, respectively. Net markups, net markdowns, and net sales for the year...

Q: In 2021, Hopyard Lumber changed its inventory method from LIFO to

In 2021, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2020 of $127,000 would have been $145,000 if FIFO had been used. Inventory at the end of 2021 is $162,00...

Q: Southeast Steel, Inc., changed from the FIFO inventory costing method

Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2020. How would this change likely be reported in the 2021 comparative financial statements?

Q: Cansela Corporation reports inventory and cost of goods sold based on calculations

Cansela Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company began 2021 with inventory of 4,500 units of its only product. The...

Q: Cast Iron Grills, Inc., manufactures premium gas barbecue grills.

Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. Cast Ironâ...

Q: Inverness Steel Corporation is a producer of flat-rolled carbon,

Inverness Steel Corporation is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products. The company’s income statement for the 2021 fiscal year report...

Q: On January 1, 2021, the Taylor Company adopted the dollar

On January 1, 2021, the Taylor Company adopted the dollar-value LIFO method. The inventory value for its one inventory pool on this date was $400,000. Inventory data for 2021 through 2023 are as follo...

Q: Kingston Company uses the dollar-value LIFO method of computing inventory

Kingston Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2021, wi...

Q: On January 1, 2021, Avondale Lumber adopted the dollar-

On January 1, 2021, Avondale Lumber adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $260,000. An internally generated cost index is used...

Q: At the beginning of 2021, Quentin and Kopps (Q&

At the beginning of 2021, Quentin and Kopps (Q&K) adopted the dollar-value LIFO (DVL) inventory method. On that date the value of its one inventory pool was $84,000. The company uses an internally...

Q: Johnson Corporation began the year with inventory of 10,000 units

Johnson Corporation began the year with inventory of 10,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following tra...

Q: Carlson Auto Dealers Inc. sells a handmade automobile as its only

Carlson Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2021, Carlson...

Q: Caterpillar, Inc., is one of the world’s largest manufacturers of

Caterpillar, Inc., is one of the world’s largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the company’s 2017 financial statements: D....

Q: Taylor Corporation reports inventory and cost of goods sold based on calculations

Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company’s records under this system reveal the following inventory layers a...

Q: Kimberly-Clark Corporation and Procter & Gamble Company reported the following

Kimberly-Clark Corporation and Procter & Gamble Company reported the following information about inventory in their financial statements and footnotes. Use this information to answer the following...

Q: PROBLEM: Selected disclosures related to Foot Locker Company’s inventory follow.

PROBLEM: Selected disclosures related to Foot Locker Company’s inventory follow. Use these disclosures to answer the following questions: a. What percentage of inventory at the end...

Q: KR Automotives is a calendar-year car dealer that sells cars

KR Automotives is a calendar-year car dealer that sells cars made by Hoyta. KR uses LIFO and calculates the lower of cost or market using an individual-item basis. The CFO of KR believes that KR will...

Q: The Kroger Co. reported cash income taxes paid of $557

The Kroger Co. reported cash income taxes paid of $557 million for the year ended January 28, 2017 (fiscal year 2016). In addition, it reported the following: a. What is the LIFO reserve for Kroger a...

Q: Nicky Bisco Products adopted the dollar-value LIFO method using 2018

Nicky Bisco Products adopted the dollar-value LIFO method using 2018 as the base year for financial reporting purposes. It uses FIFO for its internal books. Information related to Biscoâ€&#...

Q: All-Kinds-of-Cases Company sells cases for smart

All-Kinds-of-Cases Company sells cases for smart phones and notepad computers. The company uses the LIFO method for costing inventory. All-Kinds-of-Cases groups inventory by the device manufacturer fo...

Q: Use the information in E10-13 but now assume that Printmaster

Use the information in E10-13 but now assume that Printmaster Distributors Company measures inventory cost using the LIFO method. Required: a. Conduct a lower-of-cost-or-market test for Printmaster a...

Q: Zimma, Inc. uses the LIFO retail inventory method for costing

Zimma, Inc. uses the LIFO retail inventory method for costing inventory. It has beginning inventory at a cost of $23,000 and at a cost-to-retail ratio of 58%. During the year, Zimma purchased goods wi...

Q: Kiresh, Inc. uses the LIFO retail inventory method for costing

Kiresh, Inc. uses the LIFO retail inventory method for costing inventory. It has beginning inventory at a cost of $57,000 and retail value of $95,000. During the year, Kiresh purchased goods with a co...

Q: Zorinak, Inc. uses the dollar-value LIFO retail inventory

Zorinak, Inc. uses the dollar-value LIFO retail inventory method for costing inventory. It has beginning inventory costing $154,000 at a cost-to-retail ratio of 72%. During the year, Zorinak purchased...

Q: Inventory transactions for Jack Franklin Stores are summarized in the following table

Inventory transactions for Jack Franklin Stores are summarized in the following table. The company uses the LIFO perpetual method for both financial and tax reporting The inventory footnote from Jac...

Q: Burke Company uses the LIFO perpetual method for financial reporting and tax

Burke Company uses the LIFO perpetual method for financial reporting and tax purposes. A summary of Burke’s inventory for the current year follows. Required: a. Compute the ending i...

Q: Total Color, Inc. manufactures and distributes house paints. Total

Total Color, Inc. manufactures and distributes house paints. Total Color uses the dollar-value LIFO method. Information for 2018, 2019, and 2020 is presented in the following table. Year Inventory...

Q: CWB Teleconcepts, Inc. manufactures and distributes three models of handheld

CWB Teleconcepts, Inc. manufactures and distributes three models of handheld devices: the Flame, the Globe, and the HD3. CWB uses the dollar-value LIFO method. Information for 2018, 2019, and 2020 is...

Q: Joe the Grocer Markets, Inc. (JTGM) adopted the

Joe the Grocer Markets, Inc. (JTGM) adopted the dollar-value LIFO inventory method using 2018 as the base year. JTGM uses FIFO for its internal books. Information related to its inventory is presented...

Q: Giddens Company adopted the dollar-value LIFO inventory method on December

Giddens Company adopted the dollar-value LIFO inventory method on December 31, Year 1. On December 31, Year 1, Giddens’ inventory was in a single inventory pool and was valued at $40...

Q: The Loyd Company had 150 units of product Omega on hand at

The Loyd Company had 150 units of product Omega on hand at December 1, Year 1, costing $400 each. Purchases of product Omega during December were as follows: Sales during December were 500 units on D...

Q: Simmons, Inc. uses the lower-of-cost-

Simmons, Inc. uses the lower-of-cost-or-market method to value its inventory that is accounted for using the LIFO method. Data regarding an item in its inventory is as follows: What is the lower of c...

Q: Use the information provided in P10-1 for Morocco Imports.

Use the information provided in P10-1 for Morocco Imports. For each of the three cost-flow assumptions (moving-average, FIFO, and LIFO methods): Required: a. Prepare a partial income statement up to...

Q: The Outsider Company, Inc. provided the following information regarding its

The Outsider Company, Inc. provided the following information regarding its inventory for the year ended December 31, 2019. It made all of the purchases before it had any sales transactions for the ye...

Q: The Happenings Company adopted the dollar-value LIFO inventory method on

The Happenings Company adopted the dollar-value LIFO inventory method on December 31, 2017, when the price index was 1.00. Ending inventory on the date that it adopted dollar-value LIFO follows. The...

Q: Nat’s Toy Stores Limited adopted the dollar-value LIFO inventory method

Nat’s Toy Stores Limited adopted the dollar-value LIFO inventory method using 2017 as the base year. The cumulative price index for 2018 through 2021 was 1.01, 1.03, 1.04 and 1.06, r...

Q: The following information was provided by Capri Company: /

The following information was provided by Capri Company: Capri adopted the dollar-value LIFO method using 2014 as the base year. Required: a. Compute Capri’s ending inventory under...

Q: Silvio’s Taverns, Inc. adopted the dollar-value LIFO Method

Silvio’s Taverns, Inc. adopted the dollar-value LIFO Method in 2015. Information related to Silvio’s inventory follows: Required: a. Compute Silvioâ€
...

Q: O’Sullivan Corporation provided the following information regarding its ending inventory for the

O’Sullivan Corporation provided the following information regarding its ending inventory for the current year. O’Sullivan manufactures three types of athletic shoes...

Q: How are required LIFO disclosures used to compute inventory balances and cost

How are required LIFO disclosures used to compute inventory balances and cost of goods sold under the FIFO cost flow?

Q: How does a company build LIFO layers under the LIFO retail inventory

How does a company build LIFO layers under the LIFO retail inventory method?

Q: Explain the difference between the FIFO method of inventory valuation and the

Explain the difference between the FIFO method of inventory valuation and the LIFO method. Which of these methods best approximates the physical flow of units for most companies? Explain.

Q: How can financial statements be converted from the LIFO basis to the

How can financial statements be converted from the LIFO basis to the FIFO basis of inventory valuation and vice versa?

Q: Explain the unit of measure under the dollar-value LIFO method

Explain the unit of measure under the dollar-value LIFO method of inventory valuation

Q: Using the information provided in BE10-9, determine whether there

Using the information provided in BE10-9, determine whether there is a LIFO liquidation. Data from BE10-9:

Q: Todgren Incorporated adopted the dollar-value LIFO method last year.

Todgren Incorporated adopted the dollar-value LIFO method last year. Last year’s ending inventory was $56,400 with a price index of 1.0. The ending inventory for the current year at year-end (FIFO) co...

Q: Using the information provided in BE10-11, prepare the journal

Using the information provided in BE10-11, prepare the journal entry required to adjust Todgren’s ending inventory from a FIFO to a dollar-value LIFO basis. Data from BE10-11: Todgren Incorporated ad...

Q: Count Clothing Company manufactures two types of raincoats—Regular and Stain

Count Clothing Company manufactures two types of raincoats—Regular and Stain Resistant. Information related to both products is presented in the following table. Determine the endin...

Q: Sarat Boot Company manufactures two types of boots—rain boots and

Sarat Boot Company manufactures two types of boots—rain boots and snow boots. Information related to both products is presented in the following table. Determine the ending inventor...

Q: Complete the following table to find the ending inventory under the Dollar

Complete the following table to find the ending inventory under the Dollar Value LIFO Retail Inventory Method. Round percentages to two decimal places.

Q: Complete the following table to find the ending inventory under the Dollar

Complete the following table to find the ending inventory under the Dollar Value LIFO retail inventory method. Round percentages to two decimal places.

Q: Using the information provided in BE10-5, assume that Spider

Using the information provided in BE10-5, assume that Spider uses the LIFO method. Determine Spider’s ending inventory and cost of goods sold under the LIFO perpetual bas...

Q: Best Stores is considering a change in its inventory valuation method.

Best Stores is considering a change in its inventory valuation method. The company currently uses the FIFO method and may want to change to the LIFO method. Inventory information for the current year...

Q: Source Enterprises reports the following inventory information for the current year.

Source Enterprises reports the following inventory information for the current year. Compute the ending inventory and the cost of goods sold under the LIFO perpetual basis.

Q: Although U.S. GAAP allows LIFO inventory costing, IFRS

Although U.S. GAAP allows LIFO inventory costing, IFRS does not. Read paragraphs BC9 through BC21 of IASC, International Accounting Standard 2, “Inventories.” a. Why did the IASB decide not to allow...

Q: The Shirt Shop had the following transactions for T-shirts for

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: During the year, The Shirt Shop sold 800 T-shirts for $25 each. Required a. Compute the amount of e...

Q: The accounting records of Wall’s China Shop reflected the following balances as

The accounting records of Wall’s China Shop reflected the following balances as of January 1, Year 3: The following five transactions occurred in Year 3: 1. First purchase (cash): 15...

Q: The accounting records of Octavia’s Flower Shop reflected the following balances as

The accounting records of Octavia’s Flower Shop reflected the following balances as of January 1, Year 3: The following five transactions occurred in Year 3: 1. First purchase (cash)...

Q: The Shirt Shop had the following transactions for T-shirts for

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: During the year, The Shirt Shop sold 810 T-shirts for $20 each. Required a. Compute the amount of e...

Q: Mills Abrams Manufacturing Company changed its method of accounting for inventory from

Mills Abrams Manufacturing Company changed its method of accounting for inventory from the average-cost method to the LIFO basis as of January 1 of the current year. It still uses the average-cost met...

Q: Draft a footnote to disclose the accounting change implemented by the Mills

Draft a footnote to disclose the accounting change implemented by the Mills Abrams Manufacturing Company using the information provided in BE21-2. Assume that pre-tax income for the current year is $2...

Q: 1. Read FASB ASC 250-10-S99 to respond

1. Read FASB ASC 250-10-S99 to respond to the following question. ASCO Recordings has decided to change its inventory system from the LIFO method to the FIFO method for the 2015 fiscal year. Because i...

Q: The proper accounting treatment to account for a change in inventory valuation

The proper accounting treatment to account for a change in inventory valuation from FIFO to LIFO under U.S. GAAP is: a. Prospective application b. Retrospective application c. Retroactive approach...

Q: What type of change would a change from LIFO to FIFO be

What type of change would a change from LIFO to FIFO be considered?

Q: Volata Company began operations on January 1, 2019. In the

Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The companyâ€...

Q: For each item below, indicate whether FIFO or LIFO will generally

For each item below, indicate whether FIFO or LIFO will generally result in a higher reported amount when inventory costs are rising versus falling. The first answer is provided as an example.

Q: Classify each of the following accounting practices as conservative or aggressive.

Classify each of the following accounting practices as conservative or aggressive. 1. Increase the allowance for uncollectible accounts. 2. When costs are rising, change from LIFO to FIFO. 3. Change f...

Q: You have just been hired as a consultant to Gilbert Industries,

You have just been hired as a consultant to Gilbert Industries, a newly formed company. The company president, Mindy Grayson, is seeking your advice as to the appropriate inventory method Gilbert shou...

Q: Dwight’s Trophy Shop is considering the following accounting changes: a

Dwight’s Trophy Shop is considering the following accounting changes: a. Increase the allowance for uncollectible accounts. b. When costs are going up, change from LIFO to FIFO. c. Change from the str...

Q: Greg’s Bicycle Shop has the following transactions related to its top-

Greg’s Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March. Required: 1. Calculate ending inventory and cost of goods...

Q: Pete’s Tennis Shop has the following transactions related to its top-

Pete’s Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August: Required: 1. Calculate ending inventory and cost of goods s...

Q: What does it mean that FIFO has a balance-sheet focus

What does it mean that FIFO has a balance-sheet focus and LIFO has an income-statement focus?

Q: Explain how LIFO generally results in lower income taxes payable when inventory

Explain how LIFO generally results in lower income taxes payable when inventory costs are increasing. What is the LIFO conformity rule?

Q: Navy Surplus began July 2018 with 80 stoves that cost $10

Navy Surplus began July 2018 with 80 stoves that cost $10 each. During the month, the company made the following purchases at cost: The company sold 250 stoves, and at July 31, the ending inventory co...

Q: SWAT Surplus began March 2018 with 100 tents that cost $10

SWAT Surplus began March 2018 with 100 tents that cost $10 each. During the month, the company made the following purchases at cost:18 26 The company sold 318 tents, and at March 31, the ending invent...

Q: Use the data for Spear Corporation in illustrate Spear’s income tax advantage

Use the data for Spear Corporation in illustrate Spear’s income tax advantage from using LIFO over FIFO. Sales revenue is $10,080, operating expenses are $800, and the income tax rate is 25%. How much...

Q: Sherwood Company’s inventory records for the most recent year contain the following

Sherwood Company’s inventory records for the most recent year contain the following data Sherwood Company sold a total of 19,800 units during the year. Requirements: 1. Using the a...

Q: Suppose a Target store in Chicago, Illinois, ended November 2018

Suppose a Target store in Chicago, Illinois, ended November 2018 with 500,000 units of merchandise that cost $8.00 each. Suppose the store then sold 110,000 units for $960,000 during December. Further...

Q: If The Corner Frame Shop uses the LIFO method, cost of

If The Corner Frame Shop uses the LIFO method, cost of goods sold will be a. $21,200. b. $21,240. c. $20,900. d. $22,340.

Q: Use the data for Griffin Company in E6-16A to answer

Use the data for Griffin Company in E6-16A to answer the following. Requirements: 1. Compute cost of goods sold and ending inventory, using each of the following methods: a. Specific identification...

Q: Use the data for Griffin Company in E6-16A to illustrate

Use the data for Griffin Company in E6-16A to illustrate Griffin’s income tax advantage from using LIFO over FIFO. Sales revenue is $8,000, operating expenses are $2,000, and the income tax rate is 30...

Q: Carson Print Supplies, Inc., sells laser printers and supplies.

Carson Print Supplies, Inc., sells laser printers and supplies. Assume Carson started the year with 100 containers of ink (average cost of $8.90 each, FIFO cost of $9.00 each, LIFO cost of $7.80 each)...

Q: This exercise should be used in conjunction with S6-4.

This exercise should be used in conjunction with S6-4. Carson Print Supplies, Inc., is a corporation subject to a 25% income tax. Compute the company’s income tax expense under the a...

Q: Woody’s specializes in sound equipment. Company records indicate the following data

Woody’s specializes in sound equipment. Company records indicate the following data for a line of speakers: Requirements: 1. Determine the amounts that Woody’s sho...

Q: Using the LIFO method, calculate the cost of ending inventory and

Using the LIFO method, calculate the cost of ending inventory and cost of goods sold for Sandy Corporation.

Q: Suppose a Walmart store in Fillmore, Missouri, ended January 2018

Suppose a Walmart store in Fillmore, Missouri, ended January 2018 with 900,000 units of merchandise that cost $5 each. Suppose the store then sold 50,000 units for $510,000 during February. Further, a...

Q: Pickering Financial Management believes that the biotechnology industry is a good investment

Pickering Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, Bright World, Inc., uses the FI...

Q: Jasper Corporation is nearing the end of its first year of operations

Jasper Corporation is nearing the end of its first year of operations. Jasper made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units for $1,200,000 of r...

Q: For each of the following situations, identify the inventory method that

For each of the following situations, identify the inventory method that you would use; or, given the use of a particular method, state the strategy that you would follow to accomplish your goal. a. I...

Q: During 2016, Coalmont, Inc., changed to the LIFO method

During 2016, Coalmont, Inc., changed to the LIFO method. Suppose that during 2017, Coalmont changed back to the FIFO method. In 2018, the company switched back to LIFO again. Requirements: 1. What wo...

Q: Suppose Chic Fashions, a specialty retailer, had these records for

Suppose Chic Fashions, a specialty retailer, had these records for evening gowns during 2018: Assume that Chic sold 112 gowns during 2018 and uses the LIFO method to account for inventory. Chic&acir...

Q: The accounting records of Blue Bird Co. showed the following balances

The accounting records of Blue Bird Co. showed the following balances at January 1, Year 2. Transactions for Year 2 were as follows. Required a. Organize the class into three sections, and divide each...

Q: The following information related to accounting for inventory was taken from the

The following information related to accounting for inventory was taken from the 2019 annual report of Costco Wholesale Corporation. Merchandise inventories consist of the following at the end of 2019...

Q: The following note related to accounting for inventory was taken from the

The following note related to accounting for inventory was taken from the 2019 annual report of Costco Wholesale Corp.: Inventories Merchandise inventories are stated at the lower of cost or market....

Q: Shepard Company sold 4,000 units of its product at $

Shepard Company sold 4,000 units of its product at $100 per unit during the year and incurred operating expenses of $15 per unit in selling the units. It began the year with 840 units in inventory and...

Q: Complete C7-3 but assume Tracer Advance Corporation (TAC)

Complete C7-3 but assume Tracer Advance Corporation (TAC) uses LIFO in its perpetual inventory system. Data from C7-3: Tracer Advance Corporation (TAC) sells a tracking implant that vete...

Q: Complete C7-6 but assume Chipolo uses LIFO in its perpetual

Complete C7-6 but assume Chipolo uses LIFO in its perpetual inventory system. Data from C7-6: Chipolo sells a coin-sized tracking tag that attaches to keys, wallets, and other personal i...

Q: Complete C7-9 but assume Stolte Trimble Corporation (STC)

Complete C7-9 but assume Stolte Trimble Corporation (STC) uses LIFO in its perpetual inventory system. Data from C7-9: Stolte Trimble Corporation (STC) uses a perpetual inventory system. At the begi...

Q: You have been given responsibility for overseeing a bank’s small business loans

You have been given responsibility for overseeing a bank’s small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.80 in all small...

Q: One Trick Pony (OTP) incorporated and began operations near the

One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: The following information is relevant to the first mo...

Q: Contrast the effects of LIFO versus FIFO on ending inventory when (

Contrast the effects of LIFO versus FIFO on ending inventory when (a) costs are rising and (b) costs are falliv

Q: Contrast the income statement effect of LIFO versus FIFO (on Cost

Contrast the income statement effect of LIFO versus FIFO (on Cost of Goods Sold and Gross Profit) when (a) costs are rising and (b) costs are falling.

Q: Several managers in your company are experiencing personal financial problems and have

Several managers in your company are experiencing personal financial problems and have asked that your company switch from LIFO to FIFO so that they can receive bigger bonuses, which are tied to the c...

Q: Tec gear is an electronics company in the United States. It

Tec gear is an electronics company in the United States. It uses the LIFO inventory method. You plan to compare its ratios to those of Euro text, but you are concerned because Euro text uses IFRS. Wha...

Q: Nevis Corporation operates in an industry where costs are falling. The

Nevis Corporation operates in an industry where costs are falling. The company is considering changing its inventory method from FIFO to LIFO and wants to determine the impact that the change would ha...

Q: For each of the following three accounting choices, indicate the decision

For each of the following three accounting choices, indicate the decision that will yield (a) a higher net profit margin and (b) a lower current ratio. If the decision does not affect the ratio, indic...

Q: Complete the requirements for M7-11 assuming LIFO is used in

Complete the requirements for M7-11 assuming LIFO is used in a periodic inventory system. Data from M7-11: In its first month of operations, Literacy for the Illiterate opened a new bookstore and bo...

Q: Complete the requirements for M7-11 assuming LIFO is used in

Complete the requirements for M7-11 assuming LIFO is used in a periodic inventory system Data from M7-11: In its first month of operations, Literacy for the Illiterate opened a new bookstore and bou...

Q: Simple Plan Enterprises uses a periodic inventory system. Its records showed

Simple Plan Enterprises uses a periodic inventory system. Its records showed the following: Required: 1. Compute the number and cost of goods available for sale, the cost of ending inventory, and th...

Q: Refer to the information in E7-5. Assume Oahu Kiki

Refer to the information in E7-5. Assume Oahu Kiki applies its inventory costing method perpetually at the time of each sale. The company sold 240 units between January 16 and 23. Calculate the cost o...

Q: Refer to the information in E7-6. Assume Orion Iron

Refer to the information in E7-6. Assume Orion Iron applies its inventory costing method perpetually at the time of each sale. Calculate the cost of ending inventory and the cost of goods sold using t...

Q: Orion Iron Corp. tracks the number of units purchased and sold

Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume i...

Q: Scoresby Inc. tracks the number of units purchased and sold throughout

Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its...

Q: Company A uses the FIFO method to cost inventory and Company B

Company A uses the FIFO method to cost inventory and Company B uses the LIFO method. The two companies are exactly alike except for the difference in inventory costing methods. Costs of inventory item...

Q: Using the information in CP7-1, calculate the Cost of

Using the information in CP7-1, calculate the Cost of Goods Sold and Ending Inventory for Scrappers Supplies assuming it applies the LIFO cost method perpetually at the time of each sale. Compare thes...

Q: Indicate whether a company interested in minimizing its income taxes should choose

Indicate whether a company interested in minimizing its income taxes should choose the FIFO or LIFO inventory costing method under each of the following circumstances. _____ a. Declining costs _____...

Q: Springer Anderson Gymnastics prepared its annual financial statements dated December 31.

Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its...

Q: Using the information in PA7-1, calculate the cost of

Using the information in PA7-1, calculate the cost of goods sold and ending inventory for Gladstone Company assuming it applies the LIFO cost method perpetually at the time of each sale. Compare these...

Q: Using the information in PB7-1, calculate the cost of

Using the information in PB7-1, calculate the cost of goods sold and ending inventory for Mojo Industries assuming it applies the LIFO cost method perpetually at the time of each sale. Compare these a...

Q: Complete the requirements for M7-7 assuming a periodic LIFO inventory

Complete the requirements for M7-7 assuming a periodic LIFO inventory system is used. Data from M7-7: Given the following information, calculate cost of goods available for sale and endi...

Q: This case is available online in the Connect eBook. By completing

This case is available online in the Connect eBook. By completing this case, you will learn how the choice of inventory method can influence a manager’s ability to meet profit expect...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available under the Investor Re...

Q: Southeast Steel, Inc., changed from the FIFO inventory costing method

Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2024. How would this change likely be reported in the 2024 comparative financial statements?

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2012 by two talented engineers with little business training. In 2024, the company was acquired by one of its...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2024, the company was acquired by one of its...

Q: The Cochin Company has used the LIFO method of accounting for inventory

The Cochin Company has used the LIFO method of accounting for inventory during its first two years of operation, 2022 and 2023. At the beginning of 2024, Cochin decided to change to the average cost m...

Q: Shown below are net income amounts as they would be determined by

Shown below are net income amounts as they would be determined by Roberti Steel Company by each of three different inventory costing methods ($ in thousands). Required: 1. Assume that Roberti used FIF...

Q: Fantasy Fashions had used the LIFO method of costing inventories, but

Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2024 decided to change to the FIFO method. The inventory as reported at the end of 2023 using LIFO would have...

Q: Described below are six independent and unrelated situations involving accounting changes.

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2024 before any adjusting entries or closing entries were prepared. Assume the tax...

Q: At the beginning of 2024, Wagner Implements undertook a variety of

At the beginning of 2024, Wagner Implements undertook a variety of changes in accounting methods, corrected several errors, and instituted new accounting policies. Required: Indicate for each item 1...

Q: Jillet Corporation began the year with inventory of 10,000 units

Jillet Corporation began the year with inventory of 10,000 units of its only product. The units cost $8 each. The company uses a perpetual inventory system and the FIFO cost method. The following tran...

Q: On January 1, 2024, a company adopted the dollar-

On January 1, 2024, a company adopted the dollar-value LIFO method. The inventory value for its one inventory pool on this date was $400,000. Inventory data for 2024 through 2026 are as follows: Requ...

Q: A company uses the dollar-value LIFO method of computing inventory

A company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2024, with an i...

Q: On January 1, 2024, a company adopted the dollar-

On January 1, 2024, a company adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $260,000. An internally generated cost index is used to co...

Q: At the beginning of 2024, a company adopted the dollar-

At the beginning of 2024, a company adopted the dollar-value LIFO (DVL) inventory method. On that date the value of its one inventory pool was $84,000. The company uses an internally generated cost in...

Q: Auto Dealers Inc. sells a handmade automobile as its only product

Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2024, Auto Dealers ha...

Q: Caterpillar, Inc., is one of the world’s largest manufacturers of

Caterpillar, Inc., is one of the world’s largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the companyâ€&...

Q: A company reports inventory and cost of goods sold based on calculations

A company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company’s records under this system reveal the following inventory...

Q: Cansela Corporation reports inventory and cost of goods sold based on calculations

Cansela Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company began 2024 with inventory of 4,500 units of its only product. The...

Q: Cast Iron Grills, Inc., manufactures premium gas barbecue grills.

Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. Cast Ironâ...

Q: Inverness Steel Corporation is a producer of flat-rolled carbon,

Inverness Steel Corporation is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products. The company’s income statement for the 2024 fiscal year report...

Q: Smith Kline Company maintains inventory records at selling prices as well as

Smith Kline Company maintains inventory records at selling prices as well as at cost. For 2024, the records indicate the following data: Required: Assuming the price level increased from 1.00 at Janu...

Q: On January 1, 2024, HGC Camera Store adopted the dollar

On January 1, 2024, HGC Camera Store adopted the dollar-value LIFO retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2024 and 2025 are as follows: Required...

Q: Raleigh Department Store uses the conventional retail method for the year ended

Raleigh Department Store uses the conventional retail method for the year ended December 31, 2022. Available information follows: a. The inventory at January 1, 2022, had a retail value of $45,000 and...

Q: On January 1, 2024, Pet Friendly Stores adopted the retail

On January 1, 2024, Pet Friendly Stores adopted the retail inventory method. Inventory transactions at both cost and retail, and cost indexes for 2024 and 2025 are as follows: Required: 1. Estimate t...

Q: Alquist Company uses the retail method to estimate its ending inventory.

Alquist Company uses the retail method to estimate its ending inventory. Selected information about its year 2024 operations is as follows: a. January 1, 2024, beginning inventory had a cost of $100,0...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This mate...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This mate...

Q: In 2023, the Moncrief Company purchased from Jim Lester the right

In 2023, the Moncrief Company purchased from Jim Lester the right to be the sole distributor in the western states of a product called Zelenex. In payment, Moncrief agreed to pay Lester 20% of the gro...

Q: Income statement and balance sheet information abstracted from a recent annual report

Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Inc., appears below: The significant accounting policies note disclosure contained the fo...

Q: You have just been hired as a consultant to Tangier Industries,

You have just been hired as a consultant to Tangier Industries, a newly formed company. The company president, John Meeks, is seeking your advice as to the appropriate inventory method Tangier should...

Q: An accounting intern for a local CPA firm was reviewing the financial

An accounting intern for a local CPA firm was reviewing the financial statements of a client in the electronics industry. The intern noticed that the client used the FIFO method of determining ending...

Q: Maxi Corporation uses the unit LIFO inventory method. The costs of

Maxi Corporation uses the unit LIFO inventory method. The costs of the company’s products have been steadily rising since the company began operations in 2008, and cost increases are expected to conti...

Q: Target Corporation prepares its financial statements according to U.S.

Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This mate...

Q: Fred’s Inc. operates general merchandise retail discount stores and full-

Fred’s Inc. operates general merchandise retail discount stores and full-service pharmacies in the Southeastern United States. Access the company’s 10-K for the fiscal year ended January 28, 2017. You...

Q: Mayfair Department Stores, Inc., operates over 30 retail stores in

Mayfair Department Stores, Inc., operates over 30 retail stores in the Pacific Northwest. Prior to 2024, the company used the FIFO method to value its inventory. In 2024, Mayfair decided to switch to...

Q: It’s common in the electronics industry for unit costs of raw materials

It’s common in the electronics industry for unit costs of raw materials inventories to decline over time. In this environment, explain the difference between LIFO and FIFO in terms of the effect on co...

Q: Williams-Santana Inc. is a manufacturer of high-tech

Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2010 by two talented engineers with little business training. In 2024, the company was acquired by one of its...

Q: Webster Products, Inc., adopted the dollar-value LIFO method

Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2024. Webster continues to use the FIFO method for inte...

Q: Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest

Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest. Prior to 2024, the company used the FIFO method to value its inventory. In 2024, Mayfair decided to switch to the dol...

Q: Ray Solutions decided to make the following changes in its accounting policies

Ray Solutions decided to make the following changes in its accounting policies on January 1, 2024: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service co...

Q: In 2024, Hopyard Lumber changed its inventory method from LIFO to

In 2024, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2023 of $127,000 would have been $145,000 if FIFO had been used. Inventory at the end of 2024 is $162,00...

Q: Aztec Corporation uses a periodic inventory system and the retail inventory method

Aztec Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September: The...

Q: On January 1, 2024, the Brunswick Hat Company adopted the

On January 1, 2024, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2024: Required: Calculate the estimated ending inventory and cost of go...

Q: Canova Corporation adopted the dollar-value LIFO retail method on January

Canova Corporation adopted the dollar-value LIFO retail method on January 1, 2024. On that date, the cost of the inventory on hand was $15,000 and its retail value was $18,750. Information for 2024 an...

Q: Lance-Hefner Specialty Shoppes decided to use the dollar-value

Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information: Related retail price indexes are as foll...

Q: Bosco Company adopted the dollar-value LIFO retail method at the

Bosco Company adopted the dollar-value LIFO retail method at the beginning of 2024. Information for 2024 and 2025 is as follows, with certain data intentionally omitted: Required: Determine the missi...

Q: On January 1, 2024, Select Variety Store adopted the dollar

On January 1, 2024, Select Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records provided the following information: Estimate ending inventory using the dollar-value...

Q: This exercise is a continuation of BE 9–11. During

This exercise is a continuation of BE 9–11. During 2025 (the following year), purchases at cost and retail were $168,000 and $301,000, respectively. Net markups, net markdowns, and net sales for the y...

Q: Esquire Inc. uses the LIFO method to report its inventory.

Esquire Inc. uses the LIFO method to report its inventory. Inventory at the beginning of the year was $500,000 (20,000 units at $25 each). During the year, 80,000 units were purchased, all at the same...

Q: Refer to the situation described in BE 8–14. Assuming

Refer to the situation described in BE 8–14. Assuming an income tax rate of 25%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial s...

Q: King Supply maintains its internal inventory records using perpetual FIFO, but

King Supply maintains its internal inventory records using perpetual FIFO, but for financial reporting purposes, reports ending inventory and cost of goods sold using periodic LIFO. At the beginning o...

Q: Refer to the situation described in BE 8–17. Now

Refer to the situation described in BE 8–17. Now assume the FIFO ending inventory is only $45,000 greater than LIFO ending inventory. Record the year-end adjusting entry for the LIFO reserve.

Q: Walgreens Boots Alliance, Inc., reported inventories of $9,

Walgreens Boots Alliance, Inc., reported inventories of $9,451 million and $9,333 million in its August 31, 2020, and August 31, 2019, balance sheets, respectively. Cost of goods sold for the year end...

Q: At the beginning of 2024, a company adopts the dollar-

At the beginning of 2024, a company adopts the dollar-value LIFO inventory method for its one inventory pool. The pool’s value on that date was $1,400,000. The 2024 ending inventory valued at year-end...

Q: Aquatic Equipment Corporation decided to switch from the LIFO method of costing

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2024. The inventory as reported at the end of 2023 using LIFO would h...

Q: Flay Foods has always used the FIFO inventory costing method for both

Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Flay decided to change to the LIFO method. As a result of the chan...

Q: Wolfgang Kitchens has always used the FIFO inventory costing method for both

Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Wolfgang decided to change to the LIFO method. Net income i...

Q: In 2024, J J Dishes changed its method of valuing inventory

In 2024, J J Dishes changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2023, J J’s inventories were $96 million (FIFO). J J’s records were insufficient to...

Q: Alta Ski Company’s inventory records contained the following information regarding its latest

Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Required: 1. Which method, FIF...

Q: A company began 2024 with 10,000 units of inventory on

A company began 2024 with 10,000 units of inventory on hand. The cost of each unit was $5.00. During 2024, an additional 30,000 units were purchased at a single unit cost, and 20,000 units remained on...

Q: To more efficiently manage its inventory, Telnex Corporation maintains its internal

To more efficiently manage its inventory, Telnex Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information rel...

Q: Mogul Processing maintains its internal inventory records using average cost under a

Mogul Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year: Required: 1. Deter...

Q: AmerisourceBergen is an American drug wholesale company. The company uses the

AmerisourceBergen is an American drug wholesale company. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following information was...

Q: The Mega Mart Company began 2024 with inventory of 10,000

The Mega Mart Company began 2024 with inventory of 10,000 units at a cost of $7 per unit. During 2024, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000...

Q: The Churchill Corporation uses a periodic inventory system and the LIFO inventory

The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 20,000 units consisted of the following, listed in chronologic...

Q: Access the FASB Accounting Standards Codification at the FASB website (www

Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Determine each of the following: 1. The specific nine-digit Codification cit...

Q: On January 1, 2024, a company adopted the dollar-

On January 1, 2024, a company adopted the dollar-value LIFO method for its one inventory pool. The pool’s value on this date was $660,000. The 2024 and 2025 ending inventory valued at year-end costs w...

Q: Mercury Company has only one inventory pool. On December 31,

Mercury Company has only one inventory pool. On December 31, 2024, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $200,000. I...

Q: On January 1, 2024, Displays Incorporated had the following account

On January 1, 2024, Displays Incorporated had the following account balances: From January 1 to December 31, the following summary transactions occurred: a. Purchased inventory on account for $330,000...

Q: For each of the following brief scenarios, assume that you are

For each of the following brief scenarios, assume that you are the CPA reporting on the company’s financial statements. Using the form included with this problem, describe the report...

Q: Speed World Cycles sells high-performance motorcycles and motocross racers.

Speed World Cycles sells high-performance motorcycles and motocross racers. One of Speed World’s most popular models is the Kazomma 900 dirt bike. During the current year, Speed Worl...

Q: Walmart uses LIFO to account for its inventories. Recent financial statements

Walmart uses LIFO to account for its inventories. Recent financial statements were used to compile the following information (dollar figures are in millions). Instructions: a. Using the information...

Q: Mason Company purchased items of inventory as follows. Dec.

Mason Company purchased items of inventory as follows. Dec. 2 50 units @ $20 Dec. 12 12 units @ $21 Mason sold 15 units on December 20. Determine the cost of goods sold for the month under the LIFO...

Q: Murphy, Inc., purchased a new inventory item two times during

Murphy, Inc., purchased a new inventory item two times during the month of April, as follows. a. What is the amount of the ending inventory of this item on April 30 if the company has sold 75 units a...

Q: Franklin Co. had 10 units of an inventory item on hand

Franklin Co. had 10 units of an inventory item on hand at the beginning of the current year, each of which had a per-unit cost of $10. During the year, 20 additional units were purchased at $11, and 2...

Q: Notes to the financial statements of two clothing manufacturers follow: Inventories

Notes to the financial statements of two clothing manufacturers follow: Inventories: The inventories are stated at the lower of cost, determined principally by the LIFO method, or market. Inventories:...

Q: Late in the year, Software City began carrying Word Crafter,

Late in the year, Software City began carrying Word Crafter, a new word processing software program. At December 31, Software City’s perpetual inventory records included the followin...

Q: Sea Travel sells motor boats. One of Sea Travel’s most popular

Sea Travel sells motor boats. One of Sea Travel’s most popular models is the Wing. During the current year, Sea Travel purchased 12 Wings at the following costs. On April 28, Sea Tr...

Q: J.C. Penney Company, Inc., uses LIFO in

J.C. Penney Company, Inc., uses LIFO in applying the lower-of-cost-or-market. Recent financial statements were used to compile the following information (dollar figures in millions). Instructions: a...

Q: Gable, Inc., is a provider of home furnishings. The

Gable, Inc., is a provider of home furnishings. The company uses the FIFO inventory method. The following information was taken from the company’s recent financial statements (dollar...

Q: In a recent annual report, Procter & Gamble reports that product

In a recent annual report, Procter & Gamble reports that product-related inventories are primarily maintained on the FIFO method. Minor amounts of product inventories, including certain cosmetics, are...

Q: Sea Travel sells motor boats. One of Sea Travel’s most popular

Sea Travel sells motor boats. One of Sea Travel’s most popular models is the Wing. During the current year, Sea Travel purchased 12 Wings at the following costs. On April 28, Sea Tr...

Q: Jackson Specialties has been in business for more than 50 years.

Jackson Specialties has been in business for more than 50 years. The company maintains a perpetual inventory system, uses a LIFO flow assumption, and ends its fiscal year at December 31. At year-end,...

Q: It is late summer and General Wheels, Inc., an auto

It is late summer and General Wheels, Inc., an auto manufacturer, is facing a financial crisis. A large issue of bonds payable will mature next March, and the company must issue stock or new bonds to...

Q: Ford Motor Company uses FIFO and LIFO to account for different segments

Ford Motor Company uses FIFO and LIFO to account for different segments of its inventories. A note to the company’s recent financial statements indicated that if FIFO had been used for the entire inve...

Q: On May 10, Hudson Computing sold 90 Millennium laptop computers to

On May 10, Hudson Computing sold 90 Millennium laptop computers to Apex Publishers. At the date of this sale, Hudson’s perpetual inventory records included the following cost layers...

Q: The website for this text contains Walmart’s January 31, 2021,

The website for this text contains Walmart’s January 31, 2021, Form 10-K. You should read the management discussion and analysis (MD&A), financial statements, and notes to the financial statements, es...

Q: A large manufacturer of truck and car tires recently changed its cost

A large manufacturer of truck and car tires recently changed its cost-flow assumption method for inventories at the beginning of Year 2. The manufacturer has been in operation for almost 40 years, and...

Q: During its first month of operations, a business made purchases and

During its first month of operations, a business made purchases and sales as shown in the table below: All sales were made at £4 each. Required: Calculate the profit for the month and t...

Q: Canyon Ltd uses FIFO stock valuation. Canyon has recently been acquired

Canyon Ltd uses FIFO stock valuation. Canyon has recently been acquired by a US parent company. The directors in the US wish to know what the profits of the past 5 years would have been if LIFO stock...

Q: Vinnie's House of Televisions has 75 identical 27-inch color monitors

Vinnie's House of Televisions has 75 identical 27-inch color monitors in stock on January 1, 2021. Vinnie maintains records of the serial number of each monitor to track its costs. Vinnie purchased th...

Q: The following information was taken from the footnotes in the 2019 annual

The following information was taken from the footnotes in the 2019 annual report of Johnson & Johnson: a. From information in the footnote alone, indicate whether Johnson & Johnson is a retail...

Q: John Deere uses the LIFO inventory cost flow assumption, reporting inventories

John Deere uses the LIFO inventory cost flow assumption, reporting inventories on its 2019 balance sheet of $5.975 billion and a LIFO reserve of approximately $ 1.670 billion. What would be Deere's 20...

Q: Harley-Davidson manufactures motorcycles and accessories. Financial information from the

Harley-Davidson manufactures motorcycles and accessories. Financial information from the 2019 annual report is excerpted as follows: Balance Sheet Information: Inventories, net (in thousands): Invento...

Q: In the early 1980s, an oil glut caused Texaco, a

In the early 1980s, an oil glut caused Texaco, a LIFO user, to delay drilling, which cut its oil inventory levels by 16 percent. The LIFO cushion (i.e., the difference between LIFO and FIFO inventory...

Q: The 2019 annual report of Sherwin Williams, a manufacturer of paint

The 2019 annual report of Sherwin Williams, a manufacturer of paint products, contained the following footnote (dollars in millions): Note 5-/inventories Inventories were stated at the lower of cost o...

Q: Grocery giant Kroger discloses inventory in the following manner on the balance

Grocery giant Kroger discloses inventory in the following manner on the balance sheet itself (dollars in millions). Rival grocer Albertsons' s, on the other hand, disclosed information about its LIFO...

Q: IBT has used the LIFO inventory cost flow assumption for five years

IBT has used the LIFO inventory cost flow assumption for five years. As of December 31, 2019, IBT had 700 items in its inventory, and the $9,000 inventory dollar amount reported on the balance sheet c...

Q: The purchase schedule for Lumbermans and Associates is as follows:

The purchase schedule for Lumbermans and Associates is as follows: The inventory balance as of the beginning of the year was $15,000 (15,000 units at $1), and an inventory count at year-end indicated...

Q: The purchase schedule for Laundryman's Corporation is as follows: /

The purchase schedule for Laundryman's Corporation is as follows: The inventory balance as of the beginning of the year was $35,000 (500 units at $70 each). During the year ended December 31, the comp...

Q: The Magic Teddy Bear Toy Company entered into the following transactions during

The Magic Teddy Bear Toy Company entered into the following transactions during January 2020: The Magic Teddy Bear Toy Company has 5,000 teddy bears on hand at $ 19 each as of January 1, 2020. INSTRUC...

Q: Financial statements as of December 31, 2019, for Johnson &

Financial statements as of December 31, 2019, for Johnson & Johnson are as follows. The company used the FIFO inventory cost flow assumption to prepare these statements (dollars in millions). Assu...

Q: Ruhe Auto Supplies began operations in 2007. The company's inventory purchases

Ruhe Auto Supplies began operations in 2007. The company's inventory purchases and sales in the first and subsequent years of operations are as follows: The company's federal income tax rate is 30 per...

Q: You are a financial analyst currently reviewing the financial statements of Danner

You are a financial analyst currently reviewing the financial statements of Danner International and Brady Enterprises, two companies of similar size within the same industry. Net incomes of $39,300 a...

Q: Heller Bottling Company began business in 2017. Inventory units purchased and

Heller Bottling Company began business in 2017. Inventory units purchased and sold for the first year of operations and each of the following four years follow: Inadequate cash flows forced Heller Bot...

Q: The following disclosure was included in the footnotes of Caterpillar's 2019 annual

The following disclosure was included in the footnotes of Caterpillar's 2019 annual report. The company uses the LIFO cost flow assumption and reported net income of $6,093 for 2019. The company's eff...

Q: In its 2019 annual report, the Unilever Group, which published

In its 2019 annual report, the Unilever Group, which published IFRS-based financial statements, reported the following in the inventory footnote (in million euros). "During 2019, a total expense of 36...

Q: BorgWarner Inc. is a leading global supplier of highly engineered automotive

BorgWarner Inc. is a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. The following note was contained in its recent annual report:...

Q: Easley-O’Hara Office Equipment sells furniture and technology solutions to consumers

Easley-O’Hara Office Equipment sells furniture and technology solutions to consumers and to businesses. Most consumers pay for their purchases with credit cards and business customer...

Q: Assume that a retailer’s beginning inventory and purchases of a popular item

Assume that a retailer’s beginning inventory and purchases of a popular item during January included (1) 300 units at $7 in beginning inventory on January 1, (2) 450 units at $8 purchased on January 8...

Q: Wolf Company uses the LIFO method to account for inventory and Tiger

Wolf Company uses the LIFO method to account for inventory and Tiger Company uses the FIFO method. The two companies are exactly alike except for the difference in inventory cost flow assumptions. Cos...

Q: Refer to the financial statements of Walmart, given in Appendix C

Refer to the financial statements of Walmart, given in Appendix C at the end of this book. Required: 1. The company uses LIFO to account for its “Walmart U.S. inventory” and FIFO to account for its “W...

Q: An annual report for International Paper Company included the following note:

An annual report for International Paper Company included the following note: The last-in, first-out inventory method is used to value most of International Paper’s U.S. inventories . . . If the first...

Q: Keurig Dr Pepper, is a leading worldwide integrated brand owner,

Keurig Dr Pepper, is a leading worldwide integrated brand owner, bottler, and distributor of non-alcoholic beverages. Key brands include Dr Pepper, Snapple, 7-UP, Mott’s juices, A&am...

Q: Pool Corporation, Inc., reported in its recent annual report that

Pool Corporation, Inc., reported in its recent annual report that “In 2010, our industry experienced some price deflation. . . . In 2011, our industry experienced more normalized pri...

Q: The financial statements of Raychem Corporation included the following note:

The financial statements of Raychem Corporation included the following note: During the current year, plant assets were written down by $8,000,000. This writedown will reduce future expenses. Deprecia...

Q: Meadowbrook Manufacturing started Year 2 with the following account balances.

Meadowbrook Manufacturing started Year 2 with the following account balances. Cash $7,000 Common stock 5,600 Retained earnings 2,800 Raw materials inventory 600 Work in process inventory 440 Finishe...

Q: 1. In what special situations are inventory estimation procedures extremely useful

1. In what special situations are inventory estimation procedures extremely useful? 2. The manager of a retail store has become concerned about the time taken to count the merchandise on hand each qua...

Q: A company uses the LIFO inventory method to determine cost. One

A company uses the LIFO inventory method to determine cost. One of the managers complains that this is improper. He states: “We always sell our oldest products first. So we should be using first-in, f...

Q: In a period of rising prices, is the LIFO method or

In a period of rising prices, is the LIFO method or the FIFO method likely to yield the larger inventory cost?

Q: Information about Spiceland Company’s inventory of one item follows. Compute the

Information about Spiceland Company’s inventory of one item follows. Compute the cost of the ending inventory under (1) the average cost method (round unit cost to the nearest cent),...

Q: The following data pertains to software packages in the inventory of the

The following data pertains to software packages in the inventory of the Investment Software division of Foreign Market Investment Outlets: Inventory, January 1 110 units at $234 Purchases: May 10 8...

Q: LIFO liquidation is often discretionary. What motives might management have to

LIFO liquidation is often discretionary. What motives might management have to liquidate LIFO inventory?

Q: What is a LIFO reserve? How is the LIFO reserve related

What is a LIFO reserve? How is the LIFO reserve related to unrealized holding gains?

Q: General Motors Corporation reported the following information in its 10-K

General Motors Corporation reported the following information in its 10-K report: The company reports its inventory using the LIFO costing method during 2007 and 2008. a. At what dollar amount are inv...

Q: The inventory footnote from Deere & Company's 2013 I 0-K

The inventory footnote from Deere & Company's 2013 I 0-K follows($ millions). 15. INVENTORIES A majority of inventory owned by Deere & Company and its US equipment subsidiaries are valued at c...

Q: The footnote below is from the 2017 I 0-K report

The footnote below is from the 2017 I 0-K report of Whole Foods Market, Inc., a Texas-based retail grocery chain. Inventories The Company values inventories at the lower of cost or market. Cost was de...

Q: An acquaintance has proposed the following business plan to you. A

An acquaintance has proposed the following business plan to you. A local company requires a consistent quantity of a commodity and is looking for a reliable supplier. You could become that reliable su...

Q: The current asset section from Seneca Foods Corporation, a low-

The current asset section from Seneca Foods Corporation, a low-cost producer and distributor of quality fruits and vegetables, March 3 I , 2018 annual report follows: Seneca reports the following rela...

Q: The current assets of Exxon Mobil Corporation follow: /

The current assets of Exxon Mobil Corporation follow: In addition, the following note was provided in its 2017 I 0-K report: Inventories. Crude oil, products and merchandise inventories are carried at...

Q: Vireo Manufacturing Corp. provided the following note in its annual report

Vireo Manufacturing Corp. provided the following note in its annual report for the year ended January 31, 2011: On January 31, 2011, the Company elected to change its costing method for the material c...

Q: Caterpillar Inc. and Komatsu Ltd. are international manufacturers of industrial

Caterpillar Inc. and Komatsu Ltd. are international manufacturers of industrial and construction equipment. Caterpillar's headquarters is in the United States, while Komatsu's headquarters is in Japan...

Q: The current asset section of the 2017 and 2016 fiscal year end

The current asset section of the 2017 and 2016 fiscal year end balance sheets of The Kroger Co. are presented in the accompanying table: In addition, Kroger provides the following footnote describing...

Q: During 2018, Noval Company sells 270 units of inventory for $

During 2018, Noval Company sells 270 units of inventory for $100 each. The company has the following inventory purchase transactions for 2018. Required: 1. Calculate ending inventory, cost of goods so...

Q: Classify each of the following accounting practices as conservative or aggressive.

Classify each of the following accounting practices as conservative or aggressive. 1. Increase the allowance for uncollectible accounts. 2. When costs are rising, change from LIFO to FIFO. 3. Change f...

Q: Which of the following is an inherent difficulty in determining the results

Which of the following is an inherent difficulty in determining the results of operations on an interim basis? a. Cost of sales reflects only the amount of product expense allocable to revenue recogni...

Q: Mannisto Inc. uses the FIFO inventory cost flow assumption. In

Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $1,500,000 and average assets of $10,000,000. If Mannisto had used the...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Mower-Blower Sales Co. started business on January 20,

Mower-Blower Sales Co. started business on January 20, 2022. Products sold were snow blowers and lawn mowers. Each product sold for $1,400. Purchases during 2022 were as follows: The December 31, 2022...

Q: The inventory records of Kuffel Co. reflected the following information for

The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2022: Required: a. Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of go...

Q: The inventory records of Cushing Inc. reflected the following information for

The inventory records of Cushing Inc. reflected the following information for the year ended December 31, 2022: Required: a. Assume that Cushing, Inc., uses a periodic inventory system. Calculate cost...