31) Given the following data, calculate the Cost of Goods Sold using the LIFO costing method.
Date
|
Item
|
Unit
|
1/1
|
Beginning inventory
|
50 units at $20 per unit
|
3/18
|
Purchase of inventory
|
20 units at $22 per unit
|
6/20
|
Purchase of inventory
|
10 units at $23 per unit
|
9/27
|
Purchase of inventory
|
30 units at $24 per unit
|
11/27
|
Purchase of inventory
|
30 units at $25 per unit
|
12/31
|
Ending inventory
|
100 units
|
A) $720
B) $800
C) $990
D) $1,000
32) Given the following data, by how much would taxable income change if LIFO is used rather than FIFO?
Beginning inventory
|
3,000 units at $60
|
Purchases
|
6,000 units at $70
|
Units sold
|
6,000
|
A) There is no difference.
B) Increase by $30,000
C) Decrease by $30,000
D) Decrease by $40,000
33) Given the following data, by how much would taxable income change if FIFO is used rather than LIFO?
Beginning inventory
|
3,000 units at $60
|
Purchases
|
7,000 units at $70
|
Units sold
|
8,000 units
|
A) Decrease by $20,000
B) Decrease by $19,000
C) Increase by $20,000
D) Increase by $19,000
34) Which statement is FALSE?
A) LIFO is not allowed in several countries outside the United States.
B) IFRS does not permit the use of LIFO.
C) FIFO and average cost are allowed in Australia and the United Kingdom.
D) If LIFO is no longer allowed to be used in the United States, the tax burden on many companies will be lower.
35) If inventory costs are decreasing over time, the income taxes paid using FIFO will ________ the income taxes paid using LIFO.
A) exceed
B) equal
C) be less than
D) none of the above
36) If inventory costs are increasing over time, the income taxes paid using FIFO will ________ the income taxes paid using LIFO.
A) exceed
B) equal
C) be less than
D) none of the above
37) Which inventory costing method provides the most realistic measure of net income?
A) FIFO
B) LIFO
C) average cost
D) specific identification
38) Which inventory costing method provides the most current, up-to-date cost of inventory on the balance sheet?
A) FIFO
B) LIFO
C) average cost
D) specific identification
39) When inventory costs are falling, which inventory costing method minimizes the taxes paid?
A) FIFO
B) LIFO
C) average cost
D) specific identification
40) The following data was obtained from the records of Ivanovich Artists, Inc., for the current year. Round all calculations to two decimal places. Sales during the year were 400 units.
Jan. 1
|
Beginning Inventory
|
100 units at $10
|
February 1
|
Purchase
|
200 units at $12
|
April 1
|
Purchase
|
100 units at $14
|
July 1
|
Purchase
|
60 units at $16
|
Required:
1. Calculate the cost of the ending inventory using:
a.FIFO.
b.LIFO.
c.Average-cost.
2.Calculate the Cost of goods sold by:
a.FIFO.
b.LIFO.
c.Average-cost.