21. Bell Inc. took a physical inventory were not included in the physical count.
ID: 2430269 • Letter: 2
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21. Bell Inc. took a physical inventory were not included in the physical count. in transit that were shippod f.o.b. at the end of the year and determined that $810,000 of goods were on hand. In addition, the following items Bell, Inc. determined that $96,000 of goods purchased wer destination count) The company sold $40,000 Bell report as inventory at the end of the year? A) $946,000. B) S810,000, c) $850,000. D) $906,000. (goods were actually received by the company three days after the inventor worth of inventory to.b. destination. What amount should 22. Farr Co. adopted the dollar- value LIFO inventory method on December 31, 2016. Far's entrr inventory constitutes a single pool. On December 31, 2016, the inventory was the dollar-value LIFO method. Inventory data for 2017 are as follows: $640,000 under 12/31/17 inventory at year-end prices $880,000 110 Relevant price index at year end (base year 2016) Using dollar value LIFO, Farr's inventory at December 31, 2017 is A) $800,000. B) $880,000. C) $704,000. D) S816,000. 23. Geary Co. assigned $800,000 of accounts receivable to Kwik Finance Co. as security for a loan of$670.000. Kwik charged a 2% commussion on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected $220,000 on assigned accounts after deducting $760 of discounts. Geary accepted returns worth $2,700 and wrote off assigned accounts totaling $5,960. The amount of cash Geary received from Kwik at the time of the assignment was A) S603,000. B) $654,000. C) $656,600. D) $670,000. For 2017, cost of goods available for sale for Tate Corporation was $2,700,000. The gross profit rate on sales was 20%. Sales for the year were S2,400,000. What was the amount of the ending inventory? A) $480,000, B) S0. C) $540,000. D)$780,000. 24. 25· Lexington Company sells product 1976NLC for S60 per unit. The cost of one unit of 1976NLC is $54, and the replacement cost is $52. The estimated cost to dispose of a unit is $12, and the normal profit is 40%. At what amount per unit should product 1976NLC be reported, applying lower-of-cost-or-market? A) $48, B) $54. C) $52. D) $24.Explanation / Answer
21) The inventory at the end of year will include the cost of goods sold on f.o.b. destination because goods sold on f.o.b. destination is included in the inventory of seller. But the inventory at the end of year will not include goods purchased on f.o.b destination because the payment is due on the receipt of goods by purchaser.
The inventory at the end of the year = Physical inventory+Cost of goods sold on f.o.b destination
= $810,000+$40,000 = $850,000
Therefore the correct option is C) $850,000.
22) Inventory at 12/31/17 at base amount = $880,000/1.10 = $800,000
Inventory at 12/31/16 at base amount = $640,000
Increase in Base inventory = $800,000 - $640,000 = $160,000
Inventory at 12/31/17 under LIFO = ($640,000*1.00)+($160,000*1.10)
= $640,000+176,000 = $816,000
Therefore Farr's inventory at December 31, 2017 is $816,000. Hence the correct option is D) $816,000.
23) The amount of cash received from assignment = Loan Amount - Commission on Loan
= $670,000 - ($670,000*2%)
= $670,000 - $13,400 = $656,600
Therefore the correct option is C) $656,600.
24) Sales for the year = $2,400,000
Gross Profit on Sales = Sales*20% = $2,400,000*20% = $480,000
Cost of goods sold = Sales - Gross Profit = $2,400,000 - $480,000 = $1,920,000
Ending Inventory = Cost of goods available for sale - Cost of goods sold
= $2,700,000 - $1,920,000 = $780,000
Therefore the amount of ending inventory was $780,000. Hence the correct option is D) $780,000.
25) Replacement cost = $52
Ceiling: Net Realizable Value = Sale Price - Cost to sell
= $60 - $12 = $48
Floor: Net Realizable Value - Profit Margin = $48 - ($60*0.40)
= $48 - $24 = $24
Market value will not exceed ceiling NRV i.e. $48.
Market Value = $48 & Cost = $54
Lower of cost or market is $48.
Hence the correct option is A) $48.
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