Reading 36: Inventori LOS g习题精选 comparing, companies, statements, face, 2010

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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?

A) $0.7 million.

B) $0.8 million.

C) $0.5 million.

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

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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) $486,000.

B) $490,000.

C) $314,000.

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INV_F = INV_L + LIFO reserve

        =$400,000 + $86,000

        = $486,000

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

A) $66,000.

B) $64,000.

C) $74,000.

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COGS_F = COGS_L - (LIFO reserve_E - LIFO reserve_B)

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

            = $74,000

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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.

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

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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) $30,000.

B) $50,000.

C) $20,000.

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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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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) $2,800.

B) $4,000.

C) $2,400.

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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

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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) $18,000.

C) $26,000.

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

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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.

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

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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) $18,500.

C) $13,500.

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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

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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.

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

INV_F = INV_L + LIFO Reserve

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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?

A) $500.

B) $4,100.

C) $2,800.

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Ending LIFO Reserve = (LIFO COGS ? FIFO COGS) + Beginning LIFO Reserve = (6,100 ? 4,300) + 2,300 = $4,100.