标题: Reading 36: Inventori LOS g习题精选 [打印本页]
作者: honeycfa 时间: 2010-4-19 22:30 标题: [2010]Session 9-Reading 36: Inventori LOS g习题精选
LOS g: Calculate adjustments to reported financial statements related to inventory assumptions in order to aid in comparing and evaluating companies.
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?
FIFO Inventory = $0.6 + 0.2 = $0.8 million.
作者: honeycfa 时间: 2010-4-19 22:30
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:
INVF = INVL + LIFO reserve
=$400,000 + $86,000
= $486,000
If Wallace's LIFO COGS were $70,000, their FIFO COGS would be:
COGSF = COGSL - (LIFO reserveE - LIFO reserveB)
= $70,000 - ($86,000 - $90,000)
= $74,000
作者: honeycfa 时间: 2010-4-19 22:31
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:
FIFO COGS = LIFO COGS ? change in LIFO reserve. Therefore, $24,000 ? ($6,000 ? 2,250) = $20,250.
作者: honeycfa 时间: 2010-4-19 22:31
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:
Beginning LR + ΔLR = Ending LR> >
ΔLR = COGS(LIFO) – COGS(FIFO) = $70,000 – 60,000 = $10,000> >
Beginning LR = $40,000 – 10,000 = $30,000> >
作者: honeycfa 时间: 2010-4-19 22:31
An analyst gathers the following information about a firm:
- Last in, first out (LIFO) inventory = $10,000
- Beginning LIFO reserve = $2,500
- Ending LIFO reserve = $4,000
- LIFO cost of goods sold = $15,000
- LIFO net income = $1,500
- Tax rate is 40%
To convert the financial statements to a FIFO basis, the amount the analyst should add to the stockholders' equity is closest to:
If the firm had used FIFO inventory cost, tax liability would be higher by (LIFO reserve × tax rate) and retained earnings would be higher by [LIFO reserve × (1 ? tax rate)].
(LIFO reserve)(1 ? t) = $4,000(1 ? 0.4) = $2,400
作者: honeycfa 时间: 2010-4-19 22:32
If a company using last in, first out (LIFO) reports an inventory balance of $22,000 and a LIFO reserve of $4,000, the estimated value for the inventory on a first in, first out (FIFO) basis would be:
FIFO INV = LIFO INV + LIFO Reserve
X = 22,000 + 4,000
X = 26,000
作者: honeycfa 时间: 2010-4-19 22:32
The formula to convert cost of goods sold (COGS) from last in, first out (LIFO) to first in, first out (FIFO) is:
|
A) |
COGS FIFO = COGS LIFO – change in the LIFO reserve. | |
|
B) |
COGS FIFO = COGS LIFO + change in the LIFO reserve. | |
|
C) |
COGS FIFO = COGS LIFO + beginning LIFO reserve. | |
The formula for converting COGS from LIFO to FIFO is COGSF = COGSL ? (LIFO reserveE ? LIFO reserveB)
作者: honeycfa 时间: 2010-4-19 22:32
The year-end financial statements for a firm using last in first out (LIFO) acounting show an inventory level of $5,000, cost of goods sold (COGS) of $16,000, and inventory purchases of $14,500. If the LIFO reserve is $4,000 at year-end and was $1,500 at the beginning of the year, what would the COGS have been using FIFO accounting?
COGS from LIFO to FIFO:
COGSF = COGSL ? change in LIFO reserve
= COGSL - (LIFO reserveE ? LIFO reserveB)
= $16,000 ? ($4,000 ? $1,500)
= $16,000 ? $2,500
= $13,500
作者: honeycfa 时间: 2010-4-19 22:33
First in, first out (FIFO) inventory equals:
|
A) |
LIFO cost of goods sold ? changes in LIFO reserve. | |
|
B) |
LIFO inventory + LIFO reserve. | |
|
C) |
the change in LIFO reserve ? LIFO ending reserve. | |
To convert LIFO inventory balances to a FIFO basis, simply add the LIFO reserve to the LIFO inventory:
INVF = INVL + LIFO Reserve
作者: honeycfa 时间: 2010-4-19 22:33
Given the following data:
- Beginning LIFO Reserve $2,300
- Cost of Goods Sold (COGS) using LIFO $6,100
- COGS using FIFO of $4,300
What is the Ending LIFO reserve?
Ending LIFO Reserve = (LIFO COGS ? FIFO COGS) + Beginning LIFO Reserve = (6,100 ? 4,300) + 2,300 = $4,100.
作者: honeycfa 时间: 2010-4-19 22:33
The following information has been gathered about a firm:
- LIFO inventory = $10,000
- Beginning LIFO reserve = $2,500
- Ending LIFO reserve = $4,000
- LIFO cost of goods sold = $15,000
- LIFO net income = $1,500
- Tax rate is 40%
What is the FIFO COGS?
FIFO COGS = LIFO COGS – change in LIFO reserve
= $15,000 – (4,000 ? 2,500) = $13,500
作者: honeycfa 时间: 2010-4-19 22:33
The formula to convert an ending inventory value from the LIFO to the FIFO method is to:
|
A) |
FIFO inventory = LIFO inventory ? LIFO reserve. | |
|
B) |
FIFO inventory = LIFO inventory × LIFO reserve. | |
|
C) |
FIFO inventory = LIFO inventory + LIFO reserve. | |
The formula to convert an ending inventory value from the LIFO to the FIFO method is to FIFO inventory = LIFO inventory + LIFO reserve.
作者: honeycfa 时间: 2010-4-19 22:34
The Baker Company uses the last in, first out (LIFO) inventory valuation method and reported its inventory at $200,000 and its cost of goods sold (COGS) at $500,000. The company’s LIFO reserve increased from $5,000 to $30,000 during the year. What amounts would the company report for ending inventory and cost of goods sold if it were to use the first in, first out (FIFO) method?
Ending inventory under FIFO is equal to LIFO ending inventory + LIFO reserve
= 200,000 + 30,000 = 230,000
COGS under FIFO equals LIFO COGS ? (ending LIFO reserve ? beginning LIFO reserve)
= 500,000 ? (30,000 ? 5,000) = 475,000.
作者: honeycfa 时间: 2010-4-19 22:34
Given the following inventory information about the Buckner Company:
- Year-end last in, first out (LIFO) inventory of $6,500.
- Year-end LIFO reserve of $2,500.
- The current year's LIFO cost of goods sold (COGS) is $15,000.
- After tax income is $1,600.
- The previous year's LIFO reserve was $2,000.
How much higher would the firm's retained earnings be on a first in, first out (FIFO) basis if the firm's tax rate is 40%?
Adjustment to retained earnings = LIFO reserve (1 ? t) = $2,500(1 ? 0.4) = $1,500
作者: honeycfa 时间: 2010-4-19 22:34
If a firm has a first in, first out (FIFO) inventory of 9,000 and a last in, first out (LIFO) inventory of 6,500, what is the value of the LIFO reserve assuming a 40% tax rate?
LIFO reserve = FIFO inventory ? LIFO inventory = 9,000 ? 6,500 = 2,500
作者: honeycfa 时间: 2010-4-19 22:35
The Orchard Supply Company uses last in, first out (LIFO) inventory valuation. Orchard Supply had a cost of goods sold (COGS) of $1 million for the period. The inventory at the beginning of the period was $500,000 and the inventory at the end of the period was $600,000. Orchard Supply's LIFO reserve was $100,000 at the end of the previous year and $200,000 at the end of the current year. What is Orchard Supply's COGS according to first in, first out (FIFO) inventory valuation?
FIFO COGS = LIFO COGS ? change in LIFO reserve
FIFO COGS = $1 million ? $100,000 = $900,000
作者: honeycfa 时间: 2010-4-19 22:35
A financial analyst could adjust the current ratio in which a company uses the LIFO inventory valuation method to the FIFO method by:
|
A) |
deducting the LIFO reserve from the current asset. | |
|
B) |
adding the LIFO reserve to the current liabilities. | |
|
C) |
adding the LIFO reserve to the current assets. | |
The LIFO reserve increases the inventory value under FIFO and inventory is included in the numerator in the current ratio.
作者: honeycfa 时间: 2010-4-19 22:35
Granulated Corp. uses the last in, first out (LIFO) inventory cost flow assumption. Selected information from Granulated’s financial statements for the years ended December 31, 20X3 and 20X4 was as follows (in $):
|
20X3 |
20X4 |
|
Beginning Inventory |
4,375,000 |
5,525,000 |
|
Purchases |
10,200,000 |
11,300,000 |
|
Ending Inventory |
5,525,000 |
6,100,000 |
|
Beginning LIFO Reserve |
825,000 |
975,000 |
|
Ending LIFO Reserve |
975,000 |
1,125,000 |
If Granulated changed from LIFO to first in, first out (FIFO) for 20X4, Granulated’s cost of goods sold (COGS) in 20X4 under FIFO would be:
Granulated’s 20X4 LIFO cost of goods sold (beginning inventory plus purchases less ending inventory) was ($5,525,000 + $11,300,000 ? $6,100,000 =) $10,725,000. To convert to FIFO the LIFO cost of goods sold would be reduced by the increase in the LIFO reserve during 20X4 ($1,125,000 ? $975,000 =) $150,000. The FIFO COGS in 2001 was ($10,725,000 ? $150,000 =) $10,575,000.
作者: honeycfa 时间: 2010-4-19 22:36
M J Inc reported COGS of $80,000 for the year under the LIFO inventory valuation method. M J had a beginning LIFO reserve of $8,000 and an ending LIFO reserve of $11,000. The COGS under the FIFO inventory valuation method is:
FIFO COGS is reduced when a LIFO reserve is increased. So, COGS = 80,000 ? (11,000 ? 8,000) = 77,000.
作者: honeycfa 时间: 2010-4-19 22:36
Costiuk Ltd. uses the LIFO inventory cost flow assumption. Its inventory balance is $400 at the end of 20X8 and was $350 at the end of 20X7. A footnote in its financial statements reads: “Inventories would have been $70 higher in 20X8 and $80 higher in 20X7 using the FIFO cost flow assumption.”
Which of the following amounts represents the inventory balance under FIFO at the end of 20X8?
The $70 and $80 amounts represent the LIFO reserves which are differences between LIFO inventory and its value under FIFO.
FIFO inventory (20X8) = LIFO inventory (20X8) + LIFO reserve (20X8)
$400 + $70 = $470
作者: honeycfa 时间: 2010-4-19 22:36
Moore Ltd. uses the LIFO inventory cost flow assumption. Its cost of goods sold in 20X8 was $800. A footnote in its financial statements reads: “Using FIFO, inventories would have been $70 higher in 20X8 and $80 higher in 20X7.” Moore’s COGS if FIFO inventory costing were used in 20X8 is closest to:
The ending LIFO reserve is $70 and the beginning LIFO reserve is $80.
FIFO COGS = LIFO COGS ? (ending LIFO reserve ? beginning LIFO reserve)
$800 ? ($70 ? $80) = $810
作者: honeycfa 时间: 2010-4-19 22:37
Due to declining prices, Steffen Inc. has a LIFO reserve of –$20. Its income tax rate is 35%. If an analyst is converting Steffen’s financial statements to a FIFO basis, which of the following adjustments is most likely required?
|
A) |
Increase assets by $20. | |
|
B) |
Decrease liabilities by $7. | |
|
C) |
Increase shareholders’ equity by $13. | |
Declining prices (negative LIFO reserve) would result in FIFO inventory being less than LIFO inventory based on the following equation:
FIFO inventory = LIFO inventory + LIFO reserve
The balance sheet adjustment would decrease assets (inventory) by the $20 LIFO reserve. In addition, the analyst would decrease liabilities by $7 ($20 LIFO reserve × 35% tax rate). To bring the accounting equation into balance, the analyst would decrease shareholders’ equity by $13 [$20 LIFO reserve × (1 ? 35% tax rate)].
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