MULTIPLE CHOICE—CPA Adapted (Chapter 8)
1.
The following information was derived from the Year 12 accounting records of Perez
Co.:
Perez 's Goods
Perez 's Central Warehouse
Held by Consignees
Beginning inventory
$130,000
$ 14,000
Purchases
475,000
70,000
Freight-in
10,000
Transportation to consignees
5,000
Freight-out
30,000
8,000
Ending inventory
145,000
20,000
Perez's Year 12 cost of sales was
a. $470,000.
b. $500,000.
c. $534,000.
d. $539,000.
2.
Groh Co. recorded the following data pertaining to item X during January Year 12:
Units
Date
Received
Cost
Sold
On Hand
1/1/12
Inventory
$4.00
3,200
1/11/12
Sold
1,600
1,600
1/22/12
Purchase
4,000
$4.70
5,600
The moving-average unit cost of X inventory at January 31, Year 12 is
a. $4.35.
b. $4.42.
c. $4.50.
d. $4.70.
3.
During periods of rising prices, a perpetual inventory system would result in the same
dollar amount of ending inventory as a periodic inventory system under which of the
following inventory cost flow methods?
FIFO
LIFO
a.
Yes
No
b.
Yes
Yes
c.
No
Yes
d.
No
No
4.
Farr Co. adopted the dollar-value LIFO inventory method on December 31, Year 12.
Farr's entire inventory constitutes a single pool. On December 31, Year 12, the inventory
was $480,000 under the dollar-value LIFO method. Inventory data for Year 13 are as
follows:
12/31/13 inventory at year-end prices
Relevant price index at year end (base year Year 12)
$660,000
110
Using dollar value LIFO, Farr's inventory at December 31, Year 13 is
a. $528,000.
b. $612,000.
c. $600,000.
d. $660,000.
5.
In January, Stitch, Inc., adopted the dollar-value LIFO method of inventory valuation. At
adoption, inventory was valued at $50,000. During the year, inventory increased $30,000
using base-year prices, and prices increased 10%. The designated market value of
Stitch’s inventory exceeded its cost at year-end. What amount of inventory should Stitch
report in its year-end balance sheet?
a. $80,000
b. $83,000
c. $85,000
d. $88,000
6.
Moving average is the average cost flow method applicable to which of the following
inventory systems?
a.
b.
c.
d.
7.
Periodic
Yes
Yes
No
No
Perpetual
Yes
No
Yes
No
According to the net method, which of the following items should be included in the cost
of inventory?
a.
b.
c.
d.
Freight-in Costs
Yes
Yes
No
No
Purchase Discounts Not Taken
No
Yes
Yes
No
8. The following information pertains to Hague Corp.’s Year 2 cost of goods sold:
Inventory, 12/31/Year 1
$180,000
Year 2 purchases
248,000
Year 2 write-off of damaged inventory
68,000
Inventory, 12/31/Year 2
60,000
The inventory written off became damaged because of an unexpected loss of power in
the warehouse. In its Year 2 income statement, what amount should Hague report as
cost of goods sold?
a. $436,000
b. $368,000
c. $300,000
d. $248,000
9.
In Year 5, Longley, Inc. (Longley) adopted the dollar value LIFO inventory method. At
that time, Longley’s ending inventory had a base-year cost and an end of year cost of
$300,000. In year 6, the ending inventory had a $400,000 base year cost and a
$440,000 end–of-year cost.
What dollar value LIFO inventory cost would be reported on Longley’s December 31,
Year 6, balance sheet?
a. $400,000
b. $410,000
c. $430,000
d. $440,000
1-d
2-c
3-a
4-b
5-b
6-c
7-a
8-c
9-b