1. Montana Co. has determined its year-end inventory on a FIFO basis to be $586,000. Information pertaining to that inventory is as follows:
Selling price $620,000
Disposal costs 39,000
Normal profit margin 84,000
Replacement cost 513,000
What should be the carrying value of Montana's inventory?
- $497,000
- $581,000
- $586,000
- $513,000
2. Bond Company adopted the dollar-value LIFO inventory method on January 1, 2013. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO:
Ending Inventory
At Current At Base
Year Cost Year Cost Cost index
1/1/13 $306,500 $306,500 1.00
12/31/13 341,250 325,000 1.05
12/31/14 435,540 357,000 1.22
Under the dollar-value LIFO method the inventory at December 31, 2014, should be
- $364,965.
- $357,000.
- $357,925.
- None of these is correct.
3. Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
• 45 units at $104
• 72 units at $73
• 173 units at $62
Sales for the year totaled 270 units, leaving 20 units on hand at the end of the year.
Ending inventory using the average cost method is (Do not round unit cost calculation. Round your final answer to the nearest whole dollar amount):
- $1,425.
- $1,240.
- $2,080.
- $1,290.
4. Excerpts from Dowling Company's December 31, 2013 and 2012, financial statements and key ratios are presented below (all dollar values are in millions):
2013 2012
Accounts receivable $39 $22
Net sales $180 110
Cost of goods sold $104 89
Net income $39 16
Inventory turnover 5.20
Return on assets 12.2%
Equity Multiple 2.55
Dowling's 2013 average collection period is (rounded):
- 55 days
- 67 days
- 62 days
- 56 days