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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