Q1. The Orchard Supply Company uses LIFO inventory valuation. Orchard Supply had a cost of goods sold of $1 million for the period. The inventory at the beginning of the period was $0.5 million, and the inventory at the end of the period was $0.6 million. Orchard Supply's LIFO reserve was $0.1 million for the previous year and $0.2 million for the current year. What is Orchard Supply's ending inventory according to FIFO inventory valuation?

A)   $0.7 million.

B)   $0.8 million.

C)   $0.5 million.

Q2. Wallace Lumber uses LIFO and had the following note in its last financial statement: "Wallace Lumber showed a LIFO reserve of $90,000 in 2003 and $86,000 in 2004." Wallace's marginal tax rate is 31%.

If Wallace's year-end LIFO inventory balance was $400,000, their inventory based on FIFO would be:

A)   $490,000.

B)   $314,000.

C)   $486,000.

Q3. If Wallace's LIFO COGS were $70,000, their FIFO COGS would be:

A)   $66,000.

B)   $64,000.

C)   $74,000.

Q4. Brigham Corporation uses the last-in, first-out (LIFO) method of accounting for inventory.  For the year 2005, the following is provided:

• Cost of goods sold (COGS): $24,000

• Beginning inventory: $6,000

• Ending inventory: $7,500

• The notes accompanying the financial statements indicate that the LIFO reserve at the beginning of the year was $2,250 and at the end of the year was $6,000

If Brigham had used first-in, first-out (FIFO), the COGS for 2005 would be:

A)   $20,250.

B)   $3,750.

C)   $29,250.

Q5. GR Corporation uses the last-in, first out (LIFO) method of accounting for inventory and $70,000 is reported as cost of goods sold (COGS) on their income statement. However, if GR had used first-in, first-out (FIFO), the COGS would have been $60,000. If the ending LIFO reserve (LR) reported in the financial statements is $40,000, the beginning LIFO reserve is:

A)   $50,000.

B)   $20,000.

C)   $30,000.

答案和详解如下：

Q1. The Orchard Supply Company uses LIFO inventory valuation. Orchard Supply had a cost of goods sold of $1 million for the period. The inventory at the beginning of the period was $0.5 million, and the inventory at the end of the period was $0.6 million. Orchard Supply's LIFO reserve was $0.1 million for the previous year and $0.2 million for the current year. What is Orchard Supply's ending inventory according to FIFO inventory valuation?

A)   $0.7 million.

B)   $0.8 million.

C)   $0.5 million.

Correct answer is B)         

FIFO Inventory = $0.6 + 0.2 = $0.8 million.

Q2. Wallace Lumber uses LIFO and had the following note in its last financial statement: "Wallace Lumber showed a LIFO reserve of $90,000 in 2003 and $86,000 in 2004." Wallace's marginal tax rate is 31%.

If Wallace's year-end LIFO inventory balance was $400,000, their inventory based on FIFO would be:

A)   $490,000.

B)   $314,000.

C)   $486,000.

Correct answer is C)         

INV_F = INV_L + LIFO reserve

        =$400,000 + $86,000

        = $486,000

Q3. If Wallace's LIFO COGS were $70,000, their FIFO COGS would be:

A)   $66,000.

B)   $64,000.

C)   $74,000.

Correct answer is C)         

COGS_F = COGS_L - (LIFO reserve_E - LIFO reserve_B)

            = $70,000 - ($86,000 - $90,000)

            = $74,000

Q4. Brigham Corporation uses the last-in, first-out (LIFO) method of accounting for inventory.  For the year 2005, the following is provided:

• Cost of goods sold (COGS): $24,000

• Beginning inventory: $6,000

• Ending inventory: $7,500

• The notes accompanying the financial statements indicate that the LIFO reserve at the beginning of the year was $2,250 and at the end of the year was $6,000

If Brigham had used first-in, first-out (FIFO), the COGS for 2005 would be:

A)   $20,250.

B)   $3,750.

C)   $29,250.

Correct answer is A)

FIFO COGS = LIFO COGS − change in LIFO reserve. Therefore, $24,000 − ($6,000 − 2,250) = $20,250.

Q5. GR Corporation uses the last-in, first out (LIFO) method of accounting for inventory and $70,000 is reported as cost of goods sold (COGS) on their income statement. However, if GR had used first-in, first-out (FIFO), the COGS would have been $60,000. If the ending LIFO reserve (LR) reported in the financial statements is $40,000, the beginning LIFO reserve is:

A)   $50,000.

B)   $20,000.

C)   $30,000.

Correct answer is C)         

Beginning LR + ΔLR = Ending LR

ΔLR = COGS(LIFO) – COGS(FIFO) = $70,000 – 60,000 = $10,000

Beginning LR = $40,000 – 10,000 = $30,000

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