79) Thompson TV and Appliance reported the following in its 2018 financial statements:
2018
Sales
$
420,000
Cost of goods sold:
Inventory, January 1
82,000
Net purchases
340,000
Goods available for sale
422,000
Inventory, December 31
86,000
Cost of goods sold
336,000
Gross profit
$
84,000
Thompson’s 2018 inventory turnover ratio is:
A) 3.91.
B) 4.00.
C) 4.88.
D) 5.00.
80) Robertson Corporation’s inventory balance was $22,000 at the beginning of the year and
$20,000 at the end. The inventory turnover ratio for the year was 6.0 and the gross profit ratio
40%. What were net sales for the year?
A) $126,000.
B) $200,000.
C) $120,000.
D) $210,000.
81) Anthony Thomas Candies (ATC) reported the following financial data for 2018 and 2017:
2018
2017
Sales
$305,000
$284,000
Sales returns and allowances
9,000
6,000
Net sales
$296,000
$278,000
Cost of goods sold:
Inventory, January 1
43,000
36,000
Net purchases
152,000
146,000
Goods available for sale
195,000
182,000
Inventory, December 31
57,000
43,000
Cost of goods sold
138,000
139,000
Gross profit
$158,000
$139,000
ATC’s gross profit ratio (rounded) in 2018 is:
A) 53.4%.
B) 51.9%.
C) 50.3%.
D) None of these answer choices are correct.
82) Anthony Thomas Candies (ATC) reported the following financial data for 2018 and 2017:
2018
2017
Sales
$305,000
$284,000
Sales returns and allowances
9,000
6,000
Net sales
$296,000
$278,000
Cost of goods sold:
Inventory, January 1
43,000
36,000
Net purchases
152,000
146,000
Goods available for sale
195,000
182,000
Inventory, December 31
57,000
43,000
Cost of goods sold
138,000
139,000
Gross profit
$158,000
$139,000
ATC’s inventory turnover ratio for 2018 is:
A) 2.42.
B) 2.76.
C) 3.21.
D) None of these answer choices are correct.
83) Anthony Thomas Candies (ATC) reported the following financial data for 2018 and 2017:
2018
2017
Sales
$305,000
$284,000
Sales returns and allowances
9,000
6,000
Net sales
$296,000
$278,000
Cost of goods sold:
Inventory, January 1
43,000
36,000
Net purchases
152,000
146,000
Goods available for sale
195,000
182,000
Inventory, December 31
57,000
43,000
Cost of goods sold
138,000
139,000
Gross profit
$158,000
$139,000
The average days inventory for ATC (rounded) for 2018 is:
A) Less than 100 days.
B) 114 days.
C) 132 days.
D) 151 days.
84) Dollar-value LIFO:
A) Starts with ending inventory measured at current costs and re-creates LIFO layers for
measuring inventory costs.
B) Increases the recordkeeping costs of LIFO.
C) Only is allowed for internal reporting purposes.
D) None of these answer choices are correct.
85) Compared to dollar-value LIFO, unit LIFO is:
A) Less costly to implement.
B) Less susceptible to LIFO liquidation.
C) More costly to implement.
D) More concerned with cost indexes.
86) 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:
Ending Inventory
Year
At Current Cost
At Base
Year Cost
Cost Index
1/1/2018
$
300,000
$
300,000
1.00
12/31/2018
345,600
320,000
1.08
12/31/2019
420,000
350,000
1.20
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.
Base layer:
300,000
1.00
=
$
300,000
2018 layer:
1.08
=
$
357,600
87) 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:
Year-end
Ending inventory at
year-end costs
Cost Index
2018
$
126,000
1.05
2019
130,000
1.10
2020
153,600
1.20
What inventory balance should Badger report on its 12/31/2018 balance sheet?
A) $126,000
B) $121,000
C) $120,000
D) $100,000
88) 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:
Year-end
Ending inventory at
year-end costs
Cost Index
2018
$
126,000
1.05
2019
130,000
1.10
2020
153,600
1.20
In determining the inventory balance should Badger report in its 12/31/2019 balance sheet:
A) An additional layer of $23,000 is added to the 1/1/2019 balance.
B) An additional layer of $22,000 is added to the 1/1/2019 balance.
C) An additional layer of $11,000 is added to the 1/1/2019 balance.
D) None of these answer choices are correct.
89) 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:
Year-end
Ending inventory at
year-end costs
Cost Index
2018
$
126,000
1.05
2019
130,000
1.10
2020
153,600
1.20
What inventory balance would Badger report on its 12/31/2020 balance sheet?
A) $128,000.
B) $129,800.
C) $153,600.
D) None of these answer choices are correct.
90) Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had a cost
inventory of $600,000. Its inventory as of December 31, 2018, was $667,800 at year-end costs
and the cost index was 1.06. What was DVL inventory on December 31, 2018?
A) $630,000.
B) $631,800.
C) $636,000.
D) None of these answer choices are correct.
91) Udon Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an inventory
of $700,000. Its inventory as of December 31, 2018, was $777,000 at year-end costs and the cost
index was 1.05. What was DVL inventory on December 31, 2018?
A) $735,000.
B) $740,000.
C) $742,000.
D) $777,000.
92) Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an
inventory of $800,000. Its inventory as of December 31, 2018, was $811,200 at year-end costs
and the cost index was 1.04. What was DVL inventory on December 31, 2018?
A) $780,000.
B) $800,000.
C) $811,200.
D) $832,000.
93) Buckeye Corporation adopted dollar-value LIFO on January 1, 2018, when the inventory
value was $500,000 and the cost index was 1.0. On December 31, 2018, the inventory value at
year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO
inventory of:
A) $504,717.
B) $530,000.
C) $505,000.
D) $533,019.
94) Tiger Inc. adopted dollar-value LIFO on January 1, 2018, when the inventory value was
$360,000 and the cost index was 1.25. On December 31, 2018, the inventory was valued at year-
end cost of $395,000 and the cost index was 1.30. Tiger would report a LIFO inventory of:
A) $410,800.
B) $374,400.
C) $379,808.
D) $380,600.
95) A company that prepares its financial statements according to International Financial
Reporting Standards (IFRS) can use each of the following inventory valuation methods except:
A) Average cost.
B) FIFO.
C) LIFO.
D) All of these methods can be used.
52
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.
A) LIFO must be used for financial reporting if elected for taxes.
B) Adjusts inventory at the end of the period.
C) Reduced by discounts taken under both gross and net methods.
D) Inventory ready for sale.
E) Allocated between ending inventory and cost of goods sold.
96) Periodic inventory system
97) LIFO conformity rule
98) Net purchases
99) Finished goods
100) Cost of Goods available for sale
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.
A) Units grouped according to similarities.
B) Captured by FIFO for perishable products.
C) Considered a product cost.
D) Reduces the quality of current period earnings information.
E) Continuously records changes in inventory.
101) LIFO liquidation
102) LIFO pools
103) Perpetual inventory system
104) Freight-in
105) Physical flow
56
106) Consignment
107) FIFO
108) LIFO
109) Average cost
110) Cost of goods sold
58
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.
A) Not feasible for many types of products.
B) Not required to correspond to actual product flow.
C) Legal title passes when goods are delivered to common carrier.
D) Legal title passes when goods arrive at customer location.
E) Making sure goods in transit are properly accounted for.
111) F.o.b. shipping point
112) Cost flow assumption
113) Inventory cut-off
114) F.o.b. destination
115) Specific identification method
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.
A) Most recent purchases will be included in ending inventory.
B) 1 — (Cost of goods sold Net sales).
C) Purchase discounts not taken are included in inventory.
D) Products that are not yet complete.
E) Purchase discounts not taken are considered interest expense.
116) Net method
117) Work-in-process
118) Gross method
119) FIFO