Q6. 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:

A)   $2,400.

B)   $2,800.

C)   $4,000.

Q7. 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:

A)   $13,000.

B)   $26,000.

C)   $18,000.

Q8. 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 – decrease in the LIFO reserve.

B)   COGS FIFO = COGS LIFO + beginning LIFO reserve.

C)   COGS FIFO = COGS LIFO – increase in the LIFO reserve.

Q9. 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?

A)   $12,000.

B)   $13,500.

C)   $18,500.

Q10. First in, first out (FIFO) inventory equals:

A)   LIFO cost of goods sold − changes in LIFO reserve.

B)   the change in LIFO reserve − LIFO ending reserve.

C)   LIFO inventory + LIFO reserve.

答案和详解如下：

Q6. 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:

A)   $2,400.

B)   $2,800.

C)   $4,000.

Correct answer is A)

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

Q7. 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:

A)   $13,000.

B)   $26,000.

C)   $18,000.

Correct answer is B)

FIFO INV = LIFO INV + LIFO Reserve
X = 22,000 + 4,000
X = 26,000

Q8. 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 – decrease in the LIFO reserve.

B)   COGS FIFO = COGS LIFO + beginning LIFO reserve.

C)   COGS FIFO = COGS LIFO – increase in the LIFO reserve.

Correct answer is C)         

The formula for converting COGS from LIFO to FIFO is COGS_F = COGS_L − (LIFO reserve_E − LIFO reserve_B)

Q9. 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?

A)   $12,000.

B)   $13,500.

C)   $18,500.

Correct answer is B)

COGS from LIFO to FIFO:

COGS_F = COGS_L − change in LIFO reserve
= COGS_L - (LIFO reserve_E − LIFO reserve_B)
= $16,000 − ($4,000 − $1,500)
= $16,000 − $2,500
= $13,500

Q10. First in, first out (FIFO) inventory equals:

A)   LIFO cost of goods sold − changes in LIFO reserve.

B)   the change in LIFO reserve − LIFO ending reserve.

C)   LIFO inventory + LIFO reserve.

Correct answer is C)

To convert LIFO inventory balances to a FIFO basis, simply add the LIFO reserve to the LIFO inventory:

INV_F = INV_L + LIFO Reserve

THX

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