Question

1.Given the following data, by how much would taxable income change if periodic LIFO is used rather than periodic FIFO?

Beginning Inventory Purchases Units Sold 1,200 units at $25 2,500 units at $30 1,700

Select one:

a. Decrease by $6,000

b. Increase by $8,500

c. Decrease by $8,500

d. Increase by $6,000

e. Decrease by $4,000

2.

The Blotto Company made the following two errors in counting ending inventory:

• Understated 12/31/12 inventory by $2,000
• Understated 12/31/13 inventory by $3,000

The combination of these two errors will cause:

Select one:

a. 12/31/13 Retained Earnings to be understated by $3,000

b. 2013 Cost of Goods Sold to be overstated by $3,000

c. 2014 Beginning Inventory to be overstated by $1,000

d. 2014 Cost of Goods Sold to be understated by $1,000

e. 2013 Net Income to be overstated by $1,000

3.

Given the following information for the Albuquerque Company:



Using dollar-value LIFO, the 12/31/18 inventory for the balance sheet is approximately

Select one:

a. $108,696

b. $110,024

c. $120,434

d. $103,500

e. $122,684

Answer 1

Solution-1

Taxable Income will be decreased by $6000

Detail working for your refrence

Working Note
	As per FIFO	As per LIFO	Adjustment
Cost of Goods Sold	$45,000.00	$51,000.00	-$6,000.00
	(1200*25)+(500*30)	(1700*30)

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