In the context of dollar-value lifo, what is a lifo layer?

9.

Jot Construction Company uses the percentage-of-completion method of accounting. In 2013, Jot began work on a contract it had received which provided for a contract price of $6,000,000. Additional information related to the project includes: costs incurred during the year were $1,400,000; estimated costs to complete as of December 31, 2013 were $2,100,000. What amount should Jot recognize as gross profit for the project in 2013?

      [removed] $700,000

      [removed] $1,000,000

      [removed] $1,500,000

      [removed] $2,500,000

10.

Swift Builders, Inc. uses the completed-contract method of accounting for a $450,000 contract that it expects will take two years to complete. At December 31, 2013, the end of the first year of the contract, additional information related to the project includes: costs incurred to date were $290,000; estimated costs to complete were $180,000; billings to date were $325,000; collections to date were $300,000. What amount should Swift recognize as gross profit or loss for 2013?

      [removed] $ -0-

      [removed] a $20,000 loss

      [removed] a $40,000 loss

      [removed] a $110,000 loss

11.

Miller Company appropriately uses the installment method of accounting to recognize income in its financial statements. Pertinent data relating to this method of accounting includes: installment sales totaled $400,000 for 2013 and $500,000 for 2014; cost of sales were $260,000 for 2013 and $300,00 for 2014; in 2013 Miller collected $280,000 from 2013 sales; in 2014 Miller collected $100,000 from 2013 sales and $300,000 from 2014 sales. What amount should Miller report as realized gross profit on the 2014 income statement?

      [removed] $155,000

      [removed] $120,000

      [removed] $98,000

      [removed] $35,000

12.

In a consignment sale, the consignor (Points : 6)

      [removed] does not show the merchandise as an asset on its books.

      [removed] recognizes revenue only after receiving notification of sale and the cash remittance from the consignee.

      [removed] recognizes revenue when it ships merchandise to the consignee.

      [removed] periodically prepares an "account report" for the consignee.

13.

If Collier Costumes, Inc. has the following items at year-end, how much should it report as cash on the balance sheet?

Cash in bank

$25,700

Cash on hand

$620

Post-dated checks

$1,680

Certificates of deposit

$80,000

      [removed] $80,000

      [removed] $28,000

      [removed] $26,320

      [removed] $620

14.

At December 31, 2013, Vega Vacuum Corporation has cash in bank of 38,500, restricted cash in a separate account of $9,000, and a bank overdraft at another bank of $750. How much should it report as cash on the balance sheet?

      [removed] $38,500

      [removed] $29,500

      [removed] $37,750

      [removed] $46,750

15.

Which of the following is not classified as cash on the balance sheet? (Points : 6)

      [removed] Postage stamps

      [removed] Post-dated checks

      [removed] Cash restricted for plant expansion

      [removed] All of the above

16. Corresponds to CLO 4(d)

The month-end bank statement for Guthrie Motors shows a balance of $152,000 and a bank service charge of $40. Outstanding checks are $35,000, a deposit of $10,000 was in transit at month end, and a check for $1,500 was erroneously charged by the bank against the account. The correct balance in the bank account at month end is (Points : 6)

      [removed] $125,000

      [removed] $125,460

      [removed] $128,500

      [removed] $128,460

17. Corresponds to CLO 5(a)

As of December 31, Gammelguard Corporation has outstanding accounts receivable of $1.5 million. Sales on credit during the year were $9 million. The allowance for doubtful accounts has a credit balance of $20,000. If the company estimates that 9% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)

      [removed] $115,000

      [removed] $135,000

      [removed] $155,000

      [removed] $810,000

18. Corresponds to CLO 5(b)

As of December 31, Wiliams Corporation has outstanding accounts receivable of $3.6 million. Sales on credit during the year were $12.5 million. The allowance for doubtful accounts has a credit balance of $62,000. If the company estimates that 1% of its net credit sales will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 6)

      [removed] $63,000

      [removed] $125,000

      [removed] $187,000

      [removed] $360,000

19. Corresponds to CLO 5(c)

Kandris Corporation had a balance in accounts receivable of $450,000 and a balance in allowance for doubtful accounts of $34,000, when management decided the accounts receivable from Dunn Corporation of $1,800 had become uncollectible. What journal entry should Kandris Corporation make to write-off the uncollectible account? (Points : 6)

      [removed] Debit Allowance for Doubtful Accounts, credit Accounts Receivable, $1,800

      [removed] Debit Allowance for Doubtful Accounts, credit Bad Debt Expense, $1,800

      [removed] Debit Bad Debt Expense, credit Allowance for Doubtful Accounts, $1,800

      [removed] Debit Accounts Receivable, credit Allowance for Doubtful Accounts, $1,800

20. Corresponds to CLO 5(d)

At December 31, Norman Industrial Inc. had account balances before year-end adjusting entries for accounts receivable and the related allowance for doubtful accounts of $850,000 and $79,000 respectively. An aging of accounts receivable indicated that $88,000 of December 31, receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is (Points : 6)

      [removed] $938,000

      [removed] $929,000

      [removed] $771,000

      [removed] $762,000

21. Corresponds to CLO 6(a)

The following is a record of Axis Corporation's inventory transactions for the current month:

June 1

Balance, 300 units @ $65 each

June 16

Sale, 400 units @ $90

June 14

Purchase 800 units @ $68 each

June 20

Sale, 500 units @ $90

June 25

Purchase 250 units @ $70

Axis uses the periodic inventory system. Using the FIFO method, what is the amount of cost of goods sold for the month?

(Points : 6)

      [removed] $61,700

      [removed] $60,300

      [removed] $58,500

      [removed] $31,100

22. Corresponds to CLO 6(b)

The following is a record of Meyer Corporation's inventory transactions for the current month:

October 1

Balance, 500 units @ $24 each

October 9

Sale, 500 units @ $51

October 12

Purchase 900 units @ $26 each

October 19

Sale, 800 units @ $51

October 25

Purchase 600 units @ $27 each

 Meyer uses the periodic inventory system. Using the LIFO method, what is the amount of ending inventory on October 31?

(Points : 6)

      [removed] $18,900

      [removed] $16,800

      [removed] $34,600

      [removed] $17,200

23. Corresponds to CLO 6(c)

The following is a record of Tiller Corporation's inventory transactions for the current month:

January 1

Balance, 500 units @ $10 each

January 5

Sale, 290 units @ $25

January 11

Purchase, 300 units @ $12 each

January 13

Sale, 250 units @ $25

January 23

Purchase, 400 units @ $13 each

January 27

Sale, 310 units @ $25

Tiller uses the periodic inventory system. Using the weighted-average inventory method, what is the cost of goods sold for the month of January?

(Points : 6)

      [removed] $14,004

      [removed] $9,775

      [removed] $4,085

      [removed] $4,025

24. Corresponds to CLO 6(d)

The following is a record of Caulder Corporation's inventory transactions for the current month:

March 1

Balance, 500 units @ $40 each

March 12

Sale, 200 units @ $85

March 16

Purchase, 300 units @ $42 each

March 22

Sale, 350 units @ $85

March 28

Purchase, 300 units @ $43 each

 Caulder uses the perpetual inventory system. Using the LIFO method, what is the ending inventory on March 31?

(Points : 6)

      [removed] $22,900

      [removed] $22,100

      [removed] $22,600

      [removed] $23,400

25. Corresponds to CLO 7(a)

In the context of dollar-value LIFO, when inventory in base year dollars increases, (Points : 6)

      [removed] The LIFO reserve decreases

      [removed] The LIFO price index increases

      [removed] A LIFO layer is created

      [removed] A LIFO layer is liquidated

26. Corresponds to CLO 7(b)

Hemmer Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was 450,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:

Date

Inventory at Current Prices

Current Price Index

December 31, 2012

$513,600

107

December 31, 2013

$580,000

125

December 31, 2014

$650,000

130

 What is the ending inventory at December 31, 2012 under dollar-value LIFO?

(Points : 6)

      [removed] $464,000

      [removed] $464,980

      [removed] $482,100

      [removed] $497,080

27. Corresponds to CLO 7(c)

What is primary purpose of stating inventories at lower-of-cost-or-market? (Points : 6)

      [removed] To report a loss when there is a decrease in the future utility below the original cost

      [removed] To be conservative

      [removed] To report a loss whenever there is a decrease in the future utility

      [removed] To permit future profits to be recognized

28. Corresponds to CLO 7(d)

If the historical cost of product X is $64, the selling price of product X is $90, the costs to sell product X are $14, the replacement cost for product X is $55, and the normal profit margin is 30% of sales price, what is the market value that should be used in the lower-of-cost-or-market comparison? (Points : 6)

      [removed] $64

      [removed] $49

      [removed] $76

      [removed] $55

29. Corresponds to CLO 8(a)

Energy Solutions Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a gross profit rate on sales of 40%. The following information is available:

Inventory, November 1

$500,000

Purchases during November

$650,000

Sales during November

$900,000

The estimated cost of inventory at November 30 is

(Points : 6)

      [removed] $360,000

      [removed] $540,000

      [removed] $610,000

      [removed] $650,000

30. Corresponds to CLO 8(b)

Which of the following is not a basic assumption of the gross profit method of estimating inventory? (Points : 6)

      [removed] The beginning inventory plus the purchases equal total goods to be accounted for.

      [removed] Goods not sold must be on hand.

      [removed] The sales, reduced to cost, deducted from the sum of the opening inventory plus purchases, equal ending inventory.

      [removed] The total amount of purchases and the total amount of sales remain relatively unchanged from the comparable previous period.

31. Corresponds to CLO 8(c)

Arrow Corporation uses the conventional retail inventory method to value its merchandise inventory. The following information is available for the current year:

Cost

Retail

Beginning Inventory

$30,000

$50,000

Purchases

$180,000

$250,000

Freight-In

$2,500

----

Net Markups

$8,500

Net Markdowns

$10,000

Employee Discounts

$1,000

Sales

$205,000

What is the cost to retail ratio?

(Points : 6)

      [removed] 68.88%

      [removed] 68.07%

      [removed] 70.35%

      [removed] 70.83%

32. Corresponds to CLO 8(d)

Capital City Corporation uses the conventional retail inventory method to determine its ending inventory at cost. The following information is available for the current year:

Cost

Retail

Beginning Inventory

$300,000

$420,000

Purchases

$1,450,000

$2,000,000

Net Markups

$80,000

Net Markdowns

$30,000

Sales

$1,900,000

 Capital City determines that the cost-to-retail ratio is 70%. What is the ending inventory at cost?

(Points : 6)

      [removed] $520,000

      [removed] $399,000

      [removed] $300,000

      [removed] $570,000