Question

1/ Cinnamon Buns Co. (CBC) started 2018 with $52,400 of merchandise on hand. During 2018, $299,000 in merchandise was purchased on account with credit terms of 1/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,800. Merchandise with an invoice amount of $3,700 was returned for credit. Cost of goods sold for the year was $310,000. CBC uses a perpetual inventory system.

What is cost of goods available for sale, assuming CBC uses the gross method?

Multiple Choice

• $334,947.

• $357,500.

• $361,200.

• $354,547.

2/ Anthony Thomas Candies (ATC) reported the following financial data for 2018 and 2017:

	2018				2017
Sales	$	321,000			$	297,000
Sales returns and allowances		8,700				5,800
Net sales	$	312,300			$	291,200
Cost of goods sold:
Inventory, January 1		45,000				21,000
Net purchases		146,000				134,000
Goods available for sale		191,000				155,000
Inventory, December 31		64,000				45,000
Cost of goods sold		127,000				110,000
Gross profit	$	185,300			$	181,200

ATC's inventory turnover ratio for 2018 is: (Round your answer to two decimal places.)

Multiple Choice

• 1.93.

• 2.33.

• 2.53.

• None of these answer choices are correct.

3/ Nueva Company reported the following pretax data for its first year of operations.

Net sales		7,430
Cost of goods available for sale		5,630
Operating expenses		1,538
Effective tax rate		35	%
Ending inventories:
If LIFO is elected		622
If FIFO is elected		804

What is Nueva's gross profit ratio (rounded) if it elects FIFO? (Round your answer to two decimal places e.g., 0.1234 as 12.34%.)

Multiple Choice

• 32.60%.

• 35.05%.

• 65.20%.

• 55.75%.

4/ Udon Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an inventory of $701,000. Its inventory as of December 31, 2018, was $832,700 at year-end costs and the cost index was 1.10. What was DVL inventory on December 31, 2018?

Multiple Choice

• $762,600.

• $757,000.

• $771,100.

• $832,700.

Answer 1