Philipsburg Corporation sells mugs to fine retailers across the world. Data from its periodic inventory system is presented in the table below. Inventory is sold for 170 per unit. Operating expenses excluding cost of goods sold totaled 40,000.
Date Number of Units Unit Cost Total Cost
January 1 Beginning inventory 300 100 30,000
January 13 Purchase 400 110 44,000
January 22 Purchase 500 120 60,000
Which cost flow method would result in the LOWEST taxable income for the period?
A) FIFO
B) LIFO
C) Weighted average method
D) Only the LIFO cost flow method can be used for tax returns.
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Q. 2) The disaster recovery strategy known as a(n) _____________________________
_ is a fully equipped data center that is made available on a standby basis to client companies for a monthly subscriber's fee.
Fill in the blank(s) with correct word
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Q. 3) The FASB requires that a company using the direct method must provide a reconciliation between net income and cash from operating activities.
Indicate whether the statement is true or false
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Q. 4) A credit memorandum for 156 (sale price of merchandise 150; sales tax of 6) was issued to a customer for goods returned that had been purchased on account. To enter this transaction properly,
a. Sales would be debited for 6.
b. Sales would be debited for 150.
c. Sales would be debited for 156.
d. Sales would not be debited.
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Q. 5) Team Shirts issued 20,000 shares of stock for 20 per share. The par value of the stock was 1 per share. Calculate the value of capital stock and additional paid-in capital.
A) capital stock 400,000; additional paid-in capital 0
B) capital stock 380,000; additional paid-in capital 20,000
C) capital stock 20,000; additional paid-in capital 380,000
D) capital stock 0; additional paid-in capital 400,000
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Q. 6) Toys for Boys, Inc had prepaid insurance of 7,200 on January 1, 2011. This amount relates to a 12-month insurance policy purchased on July 1, 2010 for 14,400.
On July 1, 2011, Toys for Boys purchased more insurance coverage by paying 9,000 for a new one-year policy. The company's year ends on December 31, 2011 and all adjustments for the whole year are made on that date so that financial statements can be prepared. What amount should appear on the December 31, 2011 balance sheet as prepaid insurance? What amount should be reported on the year ended December 31, 2011 income statement as insurance expense?
What will be an ideal response?
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