Baruch
College – CUNY
Stan
Ross Department of Accountancy
Accountancy
3000 - Section TR24 – A
Fall 2003 – Prof. Jan Sweeney
Quiz 4
–Solution
1.
1 100 @ $48
+ 50 @ 46 =$7,100
2. 100 @ $42 + 50 @ 44 = $6,700
2.
$’000s Ceiling $255- $10 = $245, Floor $255 –$10 –
$30 = $215
Replacement $220 is middle value therefore market value
Loss is $240 - $220 = $20
3. W I P (or Overhead) $5,000
Cash $5,000
4 i 70%
ii $147,000
5. Computation of Ending Inventory, 2001
Ending
Inventory Layers at Ending Inventory
at Base-Year Price Base-Year
Prices Price
Index at Dollar-Value LIFO
$378,000 ÷ 1.08 = $350,000 $300,000 × 1.00 = $300,000
$50,000 × 1.08 =
54,000
$354 00
Bonus
A. Under FIFO income would have been higher by $378,00 - $354,000 = $24,000
B. Cash Saved = Tax saved = $24,000 * 30%
= $7,200
Baruch
College – CUNY
Stan
Ross Department of Accountancy
Accountancy
3000 - Section TR24 – B
Fall 2003 – Prof. Jan Sweeney
Quiz 4
–Solution
1.
1.
(200*$42) + (100*$44) = $12,800
2. (200*$48) + (100*$46) = $14,200
2. $000s
Ceiling $255- $10 = $245, Floor $255 –$10 – $30 = $215
Replacement $210, $215 is middle
value therefore market value
Loss is $240 - $215 = $25
3.
W I P (or Overhead) $1.6 mill
Accumulated Depreciation $1.6
mill
4. i 60%
ii
$150,000
5
Computation
of Ending Inventory, Year One
Ending Inventory Layers at
Ending Inventory
at Base-Year Price Base-Year Prices Price Index at Dollar-Value LIFO
$477,000 ÷ 1.06 = $450,000 $400,000 × 1.00 = $400,000
$50,000 × 1.06 = 53,000
$453,000
Bonus
A. Under FIFO income would have been higher by $477,000 - $453,000 = $24,000
B. Cash
Saved = Tax saved = $24,000 * 40% = $9,600
Baruch
College – CUNY
Stan
Ross Department of Accountancy
Accountancy
3000 - Section TR24 – C
Fall 2003 – Prof. Jan Sweeney
Quiz 4
–Solution
1. 1.
(90*$6 + (70*$5.4) = $918
2. (120*$5) + (40*$5.4) = $816
2.
Ceiling $47 - $6 = $41,
Floor $41 –$4 = $37
Replacement $45. $41 is the
middle value therefore market value
Loss is $43 - $41 = $2 unit or $2,000,000 total
3. (2points)
W I P (or Overhead) $4,000
Cash $4,000
6 (8points)
i. 60%
ii.
$150,000
7.. (8points)
Computation of Ending Inventory, Year One
Ending
Inventory Layers at Ending Inventory
at Base-Year Price Base-Year
Prices Price
Index Dollar-Value LIFO
$371,000 ÷ 116 = $350,000 $300,000 × 1.00 = $300,000
$50,000 × 1.06 =
53,000
$353,000
Bonus
B. Under FIFO income would have been higher by $371,00 - $353,000 = $18,000
B. Cash
Saved = Tax saved = $18,000 * 30% = $5,400