Question -
Q1. On December 31, 2003, Jason Company adopted the dollar-value LIFO retail inventory method. Inventory data for 2004 are as follows:
LIFO Cost Retail
Inventory, 12/31/03 $360,000 $500,000
Inventory, 12/31/04 ? 660,000
Increase in price level for 2004 10%
Cost-retail ratio for 2004 70%
Under the dollar-value LIFO retail method, Jason's inventory at December 31, 2004 is
A. $483,200
B. $462,000
C. $472,000
D. $437,000
Q2. On January 2, 2004, Lem Corp. bought machinery under a contract that required a down payment of $10,000, plus 24 monthly payments of $5,000 each, for total cash payments of $130,000. The cash equivalent price of the machinery was $110,000. The machinery has an estimated useful life of 10 years and estimated salvage value of $5,000. Lem uses straight-line depreciation. In its 2004 income statement, what amount should Lem report as depreciation for this machinery?
A. $12,500
B. $13,000
C. $11,000
D. $10,500
Q3. Stone Co. began operations in 2004 and reported $225,000 in income before income taxes for the year. Stone's 2004 tax depreciation exceeded its book depreciation by $25,000. Stone also had nondeductible book expenses of $10,000 related to permanent differences. Stone's tax rate for 2004 was 40%, and the enacted rate for years after 2004 is 35%. In its December 31, 2004 balance sheet, what amount of deferred income tax liability should Stone report?
A. $14,000
B. $8,750
C. $10,000
D. $12,250