1. At December 31, YR05 Ford Co. gathered the following facts about its inventory:
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Description
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Amount
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Inventory on hand in Ford's ware house
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$100
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Inventory in-transit to Ford from suppliers, shipped FOB shipping Point
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$20
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Inventory in-transit to Ford from suppliers, shipped FOB Destination
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$10
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Inventory in-transit to customers from Ford, shipped FOB Shipping Point
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$5
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2. On September 1, YR05, Bose Co. purchased 16 units of inventory from its supplier for $6 each. In the period of October-December, Bose sold 4 of these units for $9 each. At December 31, YR05, Bose had 12 units left and determined that the supplier had reduced the price of these inventory items to $5 each (replacement cost). Bose expects to continue selling the units for $9 each. Given these facts, the year end adjusting entry needed under the lower-of-cost-or-market rule would be:
a. no adjustment is needed since the expected sales price exceeds historical cost.
b. debit inventory $12, credit hain on prive appreciation $12
c. debit gain on price appreciation $12, credit inventory $12.
d. credit cost of goods sold for $12, debit inventory for $12.
e. debit cost of goods sold for $12, credit inventory for $12.
3. When a company uses the FIFO inventory costing method, the unit costs used to compute cost of goods sold and ending inventory are determined by the unit costs of which inventory purchases?
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Cost of goods sold
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Ending inventory
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Most distant (oldest) purchases
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Most recent (newest) purchases
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Most recent (newest) purchases
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Most distant (oldest) purchases
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Average of all purchases
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Average of all purchases
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First (oldest) purchases
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First (oldest) purchases
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None of the above
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4. When a company uses the LIFO inventory costing method, the unit costs used to compute cost of goods sold and ending inventory are determined by the unit costs of which inventory purchases?
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Cost of goods sold
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Ending inventory
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Most distant (oldest) purchases
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Most recent (newest) purchases
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Most recent (newest) purchases
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Most distant (oldest) purchases
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Average of all purchases
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Average of all purchases
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last (oldest) purchases
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last (oldest) purchases
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None of the above
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