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Exam 8: Inventories: Measurement

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Question 31

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In a period when costs are rising and inventory quantities are stable,the inventory method that would result in the highest ending inventory is:

A) Weighted average.
B) Moving average.
C) FIFO.
D) LIFO.

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

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Question 32

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ATC's inventory turnover ratio for 2016 is:

A) 2.42.
B) 2.76.
C) 3.21.
D) None of the above is correct.

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

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Question 33

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The use of LIFO in accounting for a firm's inventory:

Net purchases are reduced for discounts taken whether the net method is used or the gross method is used.

Cost of goods on consignment is included in the consignee's inventory until sold.

Shipping charges on outgoing goods are included in either cost of goods sold or selling expenses.

Briefly explain when there would be a tax benefit from electing LIFO rather than FIFO.

Appleton Inc.adopted dollar-value LIFO on January 1,2016,when the inventory value was $1,200,000.The December 31,2016,ending inventory at year-end costs was $1,430,000 and the cost index for the year is 1.1. Required: Compute the dollar-value LIFO inventory valuation for the December 31,2016,inventory.

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

Liquidated Corporation had a dollar-value LIFO (DVL)inventory of $800,000 at the beginning of the current year when it adopted DVL.Its year-end inventory at year-end prices was $850,000.The index for the current year was 1.08. Required: Compute the DVL inventory (rounded)to be reported at the end of the year.

Required: Compute the January 31 ending inventory and cost of goods sold for January,assuming Random Creations uses LIFO and a periodic inventory system.

On January 1,2016,the National Furniture Company adopted the dollar-value LIFO method of computing inventory.An internal cost index is used to convert ending inventory to base year.Inventory on January 1 was $200,000.Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: Required: Compute inventory amounts at the end of each year.

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Required: Compute the January 31 ending inventory and cost of goods sold for January,assuming Denver uses LIFO and a perpetual inventory system.

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 ($ in millions): "Inventories are valued at the lower of cost or market.Substantially all of the Company's inventory consists of finished goods.As of February 22,2014 and February 23,2013,approximately 57 percent and 60 percent,respectively,of the Company's inventories were valued under the LIFO method.If the FIFO method had been used to determine cost of inventories for which the LIFO method is used,the Company's inventories would have been higher by approximately $202 and $211 as of February 22,2014 and February 23,2013,respectively." Cost of goods sold for the fiscal year ended February 22,2014 was $14,623 million. Required: If SUPERVALU had used FIFO for all of its LIFO inventories,what would its cost of goods sold have been for 2014?

GG Inc.uses LIFO.GG disclosed that if FIFO had been used,inventory at the end of 2016 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2015.Assuming GG has a 40% income tax rate:

What is Nu's net income if it elects LIFO?

The Genworth Company adopted the dollar-value LIFO method on January 1,2016 when the inventory value of its one inventory pool was $450,000.The company decided to use an external index,the Consumer Price Index (CPI),to adjust for changes in the cost level.On January 1,2016,the CPI was 280.On December 31,2016,inventory valued at year-end cost was $504,000 and the CPI was 294. Required: Calculate the inventory value at the end of 2016 using the dollar-value LIFO method.

In a periodic inventory system,the cost of purchases is debited to:

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2016. Missing information has been left blank. -Required: Compute the missing amounts.