Parson Company was formed on January 1 2012 and is preparing the annual

Parson company was formed on january 1 2012 and is

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10. Parson Company was formed on January 1, 2012, and is preparing the annual financial statements dated December 31, 2012. Ending inventory information about the four major items stocked for regular sale follows:Ending Inventory, 2012ItemPQRSQuantity on hand20554010Unit cost when acquired (FIFO)$10 $40 $57 $27 Replacement cost (market) @ year end $15 $39 $55 $32 Parson follows the LCM rule in valuing its inventory and adopts the COGS method for adjustment:Which of the following is true?A) With the adjustment, COGS would be $135 higher.B) With the adjustment, COGS would be $135 lower.C) With the adjustment, COGS would be $80 higher.D) With the adjustment, COGS would be $80 lower.without LCM.With LCM Q&R valued lower by 55*1 + 40*2 = 135. Lower EI => higher COGS11. In a periodic inventory system, if the ending inventory is understated as of December 31, 2012:
1612. Given that with increasing LIFO reserves, COGS under LIFO would be higher than that of FIFO. If reported income is positive, you would not expect:13. In its first year of business, the management is contemplating the best way to present their financial statements. The economic environment has been inflationary. Which of the following would not be their choice:a. To impress their creditors with reporting high income, they would choose FIFO.b. To show management fiduciary to the shareholders, they would choose LIFO.c. For accounting conservatism, they should adopt the weighted average method.d. For a more realistic Balance Sheet information, they should choose FIFO.14. Late purchases would impact income reporting if:
1715. ABC recorded purchases of inventories under FOB shipping terms. Goods were not received by year end and thus not included in stock taking. Which is true?16. The ending inventory for a company using different inventory method is as follows:FIFOLIFO12.31.20124,0003,00012.31.20135,0006,000Which of the following is true?
18End of Chapter 7AssignmentEx: 34; 37; 39; 40; 46; 48; 50; 51; 59; 62; 67; 71; 78.& Special problem in SMGtools

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