Answer:
B: LIFO
Explanation:
Based on the information provided it can be said that in this situation the costing method that would bring the most benefit would be LIFO costing method. This acronym refers to last-in-first-out and describes a method of assuming that the last items that enter an inventory are always the first ones to be sold during that accounting year. This method would provide the most benefit because it usually results in higher cost of goods sold and a lower overall inventory.
Answer:
Question 1
b. $100,000
Question 2
(a) Goods held on consignment from another company.
Explanation:
Question 1
Calculation to determine what the cost of the ending inventory under LIFO is
Using this formula
Cost of the ending inventory =(Inventory, Jan. 1 Units*Cost )+[(Dec 31 Units on hand- Inventory, Jan. 1 Units)*Purchase, June 19 Cost ]
Let plug in the formula
Cost of the ending inventory =(8,000 * $11) + (1,000 *$12)
Cost of the ending inventory =$88,000+$12,000
Cost of the ending inventory =$100,000
Therefore the cost of the ending inventory under LIFO is $100,000
Question 2
GOODS HELD ON CONSIGNMENT FROM ANOTHER COMPANY should NOT be included in the PHYSICAL INVENTORY of a company but rather be included in the inventory of the sender of the goods which is the CONSIGNOR.
Answer: $650,000
Explanation:
Given that,
Fair and par value of issued bonds = $150,000
Prior acquisition, McGuire reported
Total assets = $500,000
Liabilities = $280,000
Stockholders’ equity = $220,000
At that date, Able reported
Total assets = $400,000
Liabilities = $250,000
Stockholders’ equity = $150,000
Account payable to McGuire = $20,000
Total assets reported by McGuire after acquisition:
= Total assets + Fair value of investment
= $500,000 + $150,000
= $650,000
Answer:
Short-term creditors are most interested in liquidity ratios because they provide the best information on the cash flow of a company and measure its ability to pay its current liabilities or the money a company owes to its creditors.
