90.

Risers Inc. reported total assets of $1,200,000 and net income of $135,000 for the
current year. Risers determined that inventory was overstated by $10,000 at the
beginning of the year (this was not corrected). What is the corrected amount for total
assets and net income for the year?
a. $1,200,000 and $135,000.
b. $1,200,000 and $145,000.
c. $1,190,000 and $125,000.
d. $1,210,000 and $145,000.

$1,200,000 and ($135,000 + $10,000) = $145,000.

117.

Black Corporation uses the FIFO method for internal reporting purposes and LIFO for
external reporting purposes. The balance in the LIFO Reserve account at the end of
2010 was $60,000. The balance in the same account at the end of 2011 is $90,000.
Blacks Cost of Goods Sold account has a balance of $450,000 from sales
transactions recorded during the year. What amount should Black report as Cost of
Goods Sold in the 2011 income statement?
a. $420,000.
b. $450,000.
c. $480,000.
d. $540,000.

$450,000 + ($90,000 $60,000) = $480,000.

136.

The following information was derived from the 2010 accounting records of Perez
Co.:
Perez 's Goods
Perez 's Central Warehouse
Held by Consignees
Beginning inventory
$130,000
$ 14,000
Purchases
575,000
70,000
Freight-in
10,000
Transportation to consignees
5,000
Freight-out
30,000
8,000
Ending inventory
145,000
20,000
Perez's 2010 cost of sales was
a. $570,000.
b. $600,000.
c. $634,000.
d. $639,000.

$130,000 + $14,000 + $575,000 + $70,000 + $10,000 + $5,000 $145,000 $20,000 =

$639,000.

Turner Corporation acquired two inventory items at a lump-sum cost of $50,000. The
acquisition included 3,000 units of product LF, and 7,000 units of product 1B. LF
normally sells for $15 per unit, and 1B for $5 per unit. If Turner sells 1,000 units of LF,
what amount of gross profit should it recognize?
a. $1,875
b. $5,625.
c. $10,000.
d. $11,875.
LF 3,000 $15 = ($45,000 $80,000) $50,000 = $28,125
1B 7,000 $5 = $35,000; $35,000 + $45,000 = $80,000
(1,000 $15) ($28,125 1,000/3,000) = $5,625.

Miles Company, a wholesaler, budgeted the following sales for the indicated months:
Sales on account
Cash sales
Total sales

June
$1,800,000
180,000
$1,980,000

July
$1,840,000
200,000
$2,040,000

August
$1,900,000
260,000
$2,160,000

All merchandise is marked up to sell at its invoice cost plus 20%. Merchandise inventories at
the beginning of each month are at 30% of that month's projected cost of goods sold.
96.The cost of goods sold for the month of June is anticipated to be
a. $1,440,000.
b. $1,500,000.
c. $1,520,000.
d. $1,650,000.
97.

Merchandise purchases for July are anticipated to be

a. $1,632,000.
b. $2,076,000.
c. $1,700,000.
d. $1,730,000.

(1 + .2)C = 1,980,000; C = $1,650,000.

COGS: July = $2,040,000 1.2 = $1,700,000
Aug. = $2,160,000 1.2 = $1,800,000
July's purchase = ($1,700,000 .7) + ($1,800,000 .3) = $1,730,000.
105.

The sales price for a product provides a gross profit of 25% of sales price. What is
the gross profit as a percentage of cost?
a. 25%.
b. 20%.
c. 33%.
d. Not enough information is provided to determine.

25% (100% 25%) = 33%

112.

Barker Pet supply uses the conventional retail method to determine its ending
inventory at cost. Assume the beginning inventory at cost (retail) were $265,600
($326,900), purchases during the current year at cost (retail) were $1,068,600
($1,386,100), freight-in on these purchases totaled $63,900, sales during the current
year totaled $1,302,000, and net markups (markdowns) were $2,000 ($96,300).
What is the ending inventory value at cost?
a. $316,700.
b. $258,111.
c. $411,000.
d. $246,667.

$326,900 + $1,386,100 + $2,000 $1,302,000 $96,300 = $316,700;

($265,600 + $1,068,600 + $63,900) ($326,900 + $1,386,100 + $2,000) = 81.5%;
$316,700 .815 = $258,111.