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Exam 8: Inventories: Measurement

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Question 71

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Bond Company adopted the dollar-value LIFO inventory method on January 1, 2018. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO: Under the dollar-value LIFO method, the inventory at December 31, 2019, should be

A) $357,600.
B) $350,000.
C) $351,600.
D) None of these answer choices are correct.

E) A) and D)
F) B) and D)

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Question 72

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The following information is taken from the accounting records of Rapid Runner Inc. for the year 2018. Missing information has been left blank. Required: Compute the missing amounts. -

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Question 73

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The inventories disclosure note in the 2014 financial statements for SUPERVALU Inc., one of the largest grocery chains in the United States, included the following: "During fiscal 2014, 2013 and 2012, inventory quantities in certain LIFO layers were reduced. These reductions resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 2014, 2013 and 2012 purchases. As a result, Cost of sales decreased by $14, $6 and $9 in fiscal 2014, 2013 and 2012, respectively. All inventories are stated at the lower of cost or current market values. Cost for inventories at the majority of our operations is determined on a last-in, first-out ("LIFO") basis." -The disclosure note indicates an inventory liquidation during 2014, 2013, and 2012. By how much did net income in 2014 increase due to the liquidation? Assume an income tax of 40%.

The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Inventory cut-off

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses FIFO.

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Physical flow

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2018. Missing information has been left blank. Required: Compute the missing amounts. -

If a company uses LIFO, a LIFO liquidation causes a company's income taxes to increase:

Company C is identical to Company D in every respect except that Company C uses LIFO and Company D uses average costs. In an extended period of rising inventory costs, Company C's gross profit and inventory turnover ratio, compared to Company D's, would be:

During 2018, WW Inc. reduced its LIFO eligible inventory quantities due to a problem with its major supplier. The effect of this liquidation was to increase its cost of goods sold by approximately $50 million. WW has a 40% income tax rate. If WW had not experienced these supplier problems and the resulting liquidation:

The use of LIFO during a long inflationary period can result in:

Which of the following statements is/are true?

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 -Ending inventory assuming LIFO in a perpetual inventory system would be:

Briefly describe why companies that use perpetual inventory systems must still perform physical inventories.

Under the gross method, purchase discounts taken are:

On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,000. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below: -What inventory balance should Badger report on its 12/31/2018 balance sheet?

The main difference between perpetual and periodic inventory systems is the timing of the allocation of costs between inventory and cost of goods sold.

Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition) : 40 units at $100 70 units at $80 170 units at $60 Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year. - Ending inventory using the LIFO method is: