Reference no: EM131789314
Questions -
Q1. Lin Co. sells its merchandise at a gross profit of 30%. The following figures are among those pertaining to Lin's operations for the 6 months ended June 30, 2005:
Sales $200,000
Beginning inventory 50,000
Purchases 130,000
On June 30, 2005, all of Lin's inventory was destroyed by fire. The estimated cost of this destroyed inventory was
A. $120,000
B. $70,000
C. $40,000
D. $20,000
Q2. On December 31, 2004, Kern Company adopted the dollar-value LIFO inventory method. All of Kern's inventories constitute a single pool. The inventory on December 31, 2004, using the dollar-value LIFO inventory method was $600,000. Inventory data for 2005 are as follows:
2/31/05 inventory at year-end prices $780,000
Relevant price index at year-end (base year 2004) 120
Under the dollar-value LIFO inventory method, Kern's inventory at December 31, 2005, would be
A. $650,000
B. $655,000
C. $660,000
D. $720,000
Q3. Caravan Corporation owned a warehouse located in the path of a proposed highway. Caravan bought the land in 1962 for $10,000. That same year, it built the warehouse at a cost of $50,000. In 2005, after prolonged litigation, the state exercised its right of eminent domain and condemned the property, awarding Caravan $200,000. Depreciation accumulated to the date of the award was $45,000. On its 2005 federal income tax return, Caravan elected not to recognize the gain since replacement property was bought for $225,000. For income statement purposes, Caravan should recognize a gain in 2005 of
A. 0
B. $160,000
C. $185,000
D. $200,000
Q4. On July 8, a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available:
Sales January 1 through July 8 $700,000
Inventory January 1 $130,000
Purchases, January 1 through July 8 $640,000
Gross profit ratio 30%
What is the estimated inventory on July 8 immediately prior to the fire?
A. $192,000
B. $490,000
C. $510,000
D. $280,000
Q5. Cloverdale, Inc. uses the conventional retail inventory method to account for inventory. The following information relates to current year's operations:
Cost Retail
Beginning Inventory and purchases $313,500 $540,000
Net Markups 30,000
Net Markdowns 20,000
Net Sales $480,000
What amount should be reported as cost of goods sold for the year?
A. $273,600.
B. $272,861.
C. $275,000.
D. None of the above.