1. During periods of rising prices, a perpetual inventory system would result in
ID: 2510171 • Letter: 1
Question
1. During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory cost flow methods?
Average Cost
LIFO
A. Yes No
B. Yes Yes
C. No No
D. No Yes
2. For Sandhill Co., the following information is available:
Capitalized leases
$570,000
Copyrights
244,000
Long-term receivables
216,000
In Sandhill’s balance sheet, intangible assets should be reported at
A. $786,000
B. $814,000
C. $216,000
D. $244,000
3. Presented below are data for Wildhorse Co.
2017
2018
Assets, January 1
$8,855
$9,717
Liabilities, January 1
4,870
?
Stockholders' Equity, Jan. 1
?
?
Dividends
1,611
1,219
Common Stock
1,456
1,304
Stockholders' Equity, Dec. 31
?
?
Net Income
1,910
1,306
Stockholders' Equity at January 1, 2018 is
A. $5,740
B. $3,985
C. $4,284
D. $5,895
Average Cost
LIFO
Explanation / Answer
Ans.1 C No No During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under only FIFO cost flow method. Ans.2 D $244000 Asssets Type of assets Capitalized leases Tangible fixed assets Copyrights Intangible fixed Long term receivales Long term asssets Ans.3 A $5740 *Caluclation: Beginning stockholder's equity of 2018 will equal to the ending stockholder's equity of 2017 So we will calculate the stockholder's equity dec 31 2017 Stockholder's equity (ending) = Net income + Beginning stockholder's equity + Common stock - Dividend 1910 + 3985 + 1456 - 1611 5740 *Beginning stockholder's equity = Assets - Liabilities 8855 - 4870 3985
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