consolidation multiple choice

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1. 
How do intra­entity sales of inventory affect the preparation of a 
consolidated statement of cash flows? 
 A) They must be deducted in calculating cash flows from 
investing activities.
 B) They must be added in calculating cash flows from investing 
activities.
 C) They must be deducted in calculating cash flows from 
operating activities.
 D) They must be added in calculating cash flows from operating 
activities.
 E) Because the consolidated balance sheet and income statement 
are used in preparing the consolidated statement of cash flows, no 
special elimination is required.
2.0/2.0
Points Earned: 
Correct Answer(s): E

2. 
Popper Co. acquired 80% of the common stock of Cocker Co. on
January 1, 2009, when Cocker had the following stockholders'
equity accounts.
Common stock - 40,000 shares outstanding
$140,000
Additional paid-in capital
105,000
Retained earnings
476,000
Total stockholders’ equity
$721,000
To acquire this interest in Cocker, Popper paid a total of $682,000
with any excess acquisition date fair value over book value being

allocated to goodwill, which has been measured for impairment
annually and has not been determined to be impaired as of January
1, 2012.
On January 1, 2012, Cocker reported a net book value of
$1,113,000 before the following transactions were conducted.
Popper uses the equity method to account for its investment in
Cocker, thereby reflecting the change in book value of Cocker. On
January 1, 2012, Cocker issued 10,000 additional shares of
common stock for $21 per share. Popper did not acquire any of this
newly issued stock. How would this transaction affect the
additional paid-in capital of the parent company?
 A) Decrease it by $23,240
 B) Decrease it by $43,680
 C) Decrease it by $45,060
 D) $0
 E) Decrease it by $68,250
2.0/2.0
Points Earned: 
Correct Answer(s): B

3. 
The following information has been taken from the consolidation
worksheet of Graham Company and its 80% owned subsidiary,
Stage Company.
(1.) Graham reports a loss on sale of land of $5,000. The land cost
Graham $20,000.
(2.) Noncontrolling interest in Stage's net income was $30,000.
(3.) Graham paid dividends of $15,000.
(4.) Stage paid dividends of $10,000.
(5.) Excess acquisition-date fair value over book value was
expensed by $6,000.
(6.) Consolidated accounts receivable decreased by $8,000.
(7.) Consolidated accounts payable decreased by $7,000.

 
Using the indirect method, where does the decrease in accounts
payable appear in a consolidated statement of cash flows?
 A) $5,600 increase to net income as an operating activity
 B) $7,000 decrease to net income as an operating activity
 C) $5,600 decrease to net income as an operating activity
 D) $7,000 increase as a financing activity
 E) $7,000 increase to net income as an operating activity.
2.0/2.0
Points Earned: 
Correct Answer(s): B

4. 
On January 1, 2009, Nichols Company acquired 80% of Smith
Company's common stock and 40% of its non-voting, cumulative
preferred stock. The consideration transferred by Nichols was
$1,200,000 for the common and $124,000 for the preferred. Any
excess acquisition-date fair value over book value is considered
goodwill. The capital structure of Smith immediately prior to the
acquisition is:
Common stock, $10 par value (50,000 shares outstanding)
$500,000
Preferred stock, 6% cumulative, $100 par value,
3,000 shares outstanding
300,000
Additional paid-in capital
200,000
Retained earnings
500,000
Total stockholders’ equity
$1,500,000
Compute the goodwill recognized in consolidation.

 A) $124,000
 B) $310,000
 C) $(196,000)
 D) $800,000
 E) $0
Points Earned: 

2.0/2.0

Correct Answer(s): B

5. 
Ryan Company owns 80% of Chase Company. The original
balances presented for Ryan and Chase as of January 1, 2011, are
as follows:
Chase Company:
Shares outstanding
50,000
Book value
$400,000
Book value
$8
Ryan Company:
Shares owned of Chase
40,000
Book value of investment
$320,000
Assume Chase issues 30,000 additional shares common stock
solely to Ryan for $12 per share. What is Ryan's percent ownership
in Chase after the acquisition of the treasury shares (rounded)?
 A) 95%
 B) 80%
 C) 64%
 D) 69%
 E) 76%
0.0/2.0
Points Earned: 
Correct Answer(s): A

6. 
A parent company owns a 70 percent interest in a subsidiary whose
stock has a book value of $27 per share. The last day of the year, 
the subsidiary issues new shares for $27 per share, and the parent 
buys its 70 percent interest in the new shares. Which of the 
following statements is true? 
 A) Since the sale was made at the end of the year, the parent's 
investment account is not affected.
 B) Since the shares were sold for book value, the parent's 
investment account must be decreased.
 C) None of these are true
 D) Since the shares were sold for book value, the parent's 
investment account must be increased.
 E) Since the shares were sold for book value and the parent 
bought 70 percent of the shares, the parent's investment account is 
not affected except for the price of the new shares.
0.0/2.0
Points Earned: 
Correct Answer(s): E

7. 
If a subsidiary reacquires its outstanding shares from outside 
ownership for more than book value, which of the following 
statements is true? 
 A) Treasury stock on the parent's books will decrease.
 B) Additional paid­in capital on the parent company's books will 
decrease.
 C) No adjustment is necessary.
 D) Treasury stock on the parent's books will increase.
 E) Investment in subsidiary will increase.

Points Earned: 

2.0/2.0

Correct Answer(s): B

8. 
Horse Corporation acquires all of Pony, Inc. for $300,000 cash. On
that date, Pony has net assets with fair value of $250,000 but a 
book value and tax basis of $200,000. The tax rate is 40 percent. 
Prior to this date, neither Horse nor Pony has reported any deferred
income tax assets or liabilities. What amount of goodwill should be
recognized on the date of the acquisition? 
 A) $150,000.
 B) $100,000.
 C) $50,000.
 D) $0.
 E) $70,000.
0.0/2.0
Points Earned: 
Correct Answer(s): E

9. 
Delta Corporation owns 90 percent of Sigma Company, and Sigma
owns 90 percent of Pi, Inc., all of which are domestic corporations.
Information for the three companies for the year ending December
31, 2011 follows:
Delta.
Sigma
Pi
Operating income
$600,000 $400,000 $200,000
Unrealized gains in
ending inventory
24,000
0
8,000

(included in operating income above)
What is the noncontrolling interest in Pi's income for 2011?
 A) $20,000
 B) $0
 C) $10,000
 D) $9,600
 E) $19,200
Points Earned: 

2.0/2.0

Correct Answer(s): E

10. 
Which of the following statements is true regarding the 
subsidiary's investment in its parent's common stock? 
 A) The consolidation worksheet entry to eliminate the subsidiary's
investment in parent's common stock is debited to treasury stock.
 B) The consolidation worksheet entry to eliminate the subsidiary's
investment in parent's common stock is debited to additional paid­
in capital.
 C) All of the parent company's common stock is eliminated.
 D) The consolidation worksheet entry to eliminate the subsidiary's
investment in parent's common stock is debited to retained 
earnings.
 E) The investment in parent company's common stock is not 
eliminated in consolidation.
2.0/2.0
Points Earned: 
Correct Answer(s): A

11. 
White Company owns 60% of Cody Company. Separate tax 
returns are required. For 2010, White's operating income 
(excluding taxes and any income from Cody) was $300,000 while 
Cody reported a pretax income of $125,000. During the period, 
Cody paid a total of $25,000 in cash dividends; $15,000 (60%) to 
White and $10,000 to the noncontrolling interest. White paid 
dividends of $180,000. The income tax rate for both companies is 
30%. Compute White's deferred income taxes for 2011. 
 A) $11,250.
 B) $6,000.
 C) $2,250.
 D) $21,000.
 E) $3,150.
2.0/2.0
Points Earned: 
Correct Answer(s): C

12. 
Prescott Corp. owned 90% of Bell Inc., while Bell owned 10% of 
the outstanding common shares of Prescott. No goodwill or other 
allocations were recognized in connection with either of these 
acquisitions. Prescott reported operating income of $266,000 for 
2009 whereas Bell earned $98,000 during the same period. No 
investment income was included within either of these income 
totals. On a consolidated income statement, what is the 
noncontrolling interest in Bell's net income ? 
 A) $12,460.
 B) $9,800.
 C) $13,692.

 D) $10,836.
 E) $11,214.
Points Earned: 

0.0/2.0

Correct Answer(s): B

13. 
Chase Company owns 80% of Lawrence Company and 40% of 
Ross Company. Lawrence Company also owns 30% of Ross 
Company. Separate operating incomes for 2011 of Chase, 
Lawrence, and Ross are $450,000, $300,000, and $250,000, 
respectively. Each company also retains a $20,000 unrealized gain 
in their current income figures. Annual amortization expense of 
$15,000 is assigned to Chase's investment in Lawrence and another
$15,000 is assigned to Lawrence's investment in Ross. Compute 
the noncontrolling interest in Ross' net income for 2011. 
 A) $92,000.
 B) $69,000.
 C) $75,000.
 D) $64,500.
 E) $77,400.
2.0/2.0
Points Earned: 
Correct Answer(s): D

14. 
Reggie, Inc. owns 70 percent of Nancy Corporation. During the 
current year, Nancy reported earnings before tax of $100,000 and 
paid a dividend of $30,000. The income tax rate for both 
companies is 30 percent. What deferred income tax liability arising

in the current year must be recognized in the consolidated balance 
sheet? 
 A) $9,800.
 B) $1,470.
 C) $2,400.
 D) $1,680.
 E) $2,940.
2.0/2.0
Points Earned: 
Correct Answer(s): D

15. 
Elektronix, Inc. has three operating segments with the following
information:
DVDs
VCRs
MP3s
Sales to outsiders
$4,000,000
$500,000
$2,000,000
Intersegment transfers
none
none
100,000
Segment expenses
3,000,000
624,000
1,700,000
Segment assets
14,000,000
6,000,000
5,000,000
What is the minimum amount of revenue an operating segment
must have to be considered a reportable segment?
 A) $670,000
 B) $690,000
 C) $680,000
 D) $650,000
 E) $660,000

Points Earned: 

0.0/2.0

Correct Answer(s): E

16. 
Which of the following statements is true regarding the reporting 
of revenues in an interim report? 
 A) Projected losses on long­term contracts should be deferred to 
the annual report.
 B) The percentage­of­completion method of reporting long­term 
construction projects is not an acceptable method for interim 
reporting.
 C) Revenues should be recognized on the cash basis of accounting
for interim reporting.
 D) Revenues should be recognized on the income tax basis for 
interim reporting.
 E) Revenues should be recognized in interim periods in the same 
way as they are on an annual basis.
2.0/2.0
Points Earned: 
Correct Answer(s): E

17. 
Which of the following would be an acceptable grouping for a U.S.
company to provide information by geographic area? 
 A) United States, Central America, Mexico, Germany.
 B) United States, Asia, Germany.
 C) United States, Europe, Taiwan.
 D) United States, All Other Countries.
 E) South America, Spain, All Other Countries.

Points Earned: 

2.0/2.0

Correct Answer(s): D

18. 
A company that generates reports by both geographic region and
product line must consider additional criteria in identifying
operating segments when there are multiple sets of reports. Which
of the following statement(s) is correct?
(I.) An operating segment has a segment manager who is directly
accountable to the chief operating decision maker for its financial
performance.
(II.) If more than one set of organizational units exists, each
organizational unit is considered an operating segment even if
there is only one set for which segment managers are held
responsible.
(III.) If segment managers exist for two or more overlapping sets
of organizational units, the nature of the business activities must be
considered.
 A) I and III only
 B) None of these
 C) I and II only
 D) II and III only
 E) I, II, and III
Points Earned: 

0.0/2.0

Correct Answer(s): A

19. 

Which of the following is a criterion for determining whether an 
operating segment is separately reportable? 
 A) An operating segment's assets are 10 percent or more of 
consolidated liabilities.
 B) An operating segment's assets are 10 percent or more of 
corporate assets.
 C) An operating segment's assets are 10 percent or more of 
combined segment assets.
 D) An operating segment's assets are 10 percent or more of 
combined segment liabilities.
 E) An operating segment's assets are 10 percent or more of 
consolidated assets.
2.0/2.0
Points Earned: 
Correct Answer(s): C

20. 
Which of the following is not one of the criteria management 
should consider in determining whether business activities and 
environments of an operating segment are similar? 
 A) The type or class of customer.
 B) The nature of the production process.
 C) The distribution methods.
 D) The nature of the regulatory environment, if applicable.
 E) The geographical location of the operations.
2.0/2.0
Points Earned: 
Correct Answer(s): E

21. 

Kaycee Corporation's revenues for the year ended December 31,
2010, were as follows:
Consolidated Revenue per the Income Statement: $1,200,000
Upstream Intersegment Sales: $180,000
Downstream Intersegment Sales: $60,000
For purposes of the Revenue Test, what amount will be used as the
benchmark for determining whether a segment is reportable?
 A) $138,000
 B) $0
 C) $144,000
 D) $24,000
 E) $120,000
Points Earned: 

0.0/2.0

Correct Answer(s): C

1. 
Where do intra­entity sales of inventory appear in a 
consolidated statement of cash flows? 
 A) Cash flows from investing activities.
 B) Cash flows from financing activities.
 C) Cash flows from operating activities.
 D) They do not appear in the consolidated statement 
of cash flows.
 E) Supplemental schedule of noncash investing and 
financing activities.
2.0/2.0
Points Earned: 
Correct Answer(s): D

2. 
On January 1, 2009, Nichols Company acquired 80%
of Smith Company's common stock and 40% of its
non-voting, cumulative preferred stock. The
consideration transferred by Nichols was $1,200,000
for the common and $124,000 for the preferred. Any
excess acquisition-date fair value over book value is
considered goodwill. The capital structure of Smith
immediately prior to the acquisition is:
Common stock, $10 par value (50,000 shares
outstanding) $500,000
Preferred stock, 6% cumulative, $100 par value,
3,000 shares outstanding
300,000
Additional paid-in capital
200,000
Retained earnings
500,000
Total stockholders’ equity
$1,500,000
Determine the amount and account to be recorded
for Nichols' investment in Smith.

 A) $1,200,000 for Investment in Smith's Common 
Stock and $124,000 for Investment in Smith's 
Preferred Stock.
 B) $1,448,000 for Investment in Smith's Common 
Stock.
 C) $1,324,000 for Investment in Smith
 D) $1,200,000 for Investment in Smith's Common 
Stock and $120,000 for Investment in Smith's 
Preferred Stock
 E) $1,200,000 for Investment in Smith
2.0/2.0
Points Earned: 
Correct Answer(s): A

3. 
On January 1, 2011, Riney Co. owned 80% of the
common stock of Garvin Co. On that date, Garvin's
stockholders' equity accounts had the following
balances:
Common stock ($5 par value)
$250,000
Additional paid-in capital
110,000
Retained earnings
330,000
Total stockholders’ equity
$690,000
The balance in Riney's Investment in Garvin Co.

account was $552,000, and the noncontrolling
interest was $138,000. On January 1, 2011, Garvin
Co. sold 10,000 shares of previously unissued
common stock for $15 per share. Riney did not
acquire any of these shares. What is the balance in
Investment in Garvin Co. after the sale of the 10,000
shares of common stock?
 A) $404,000
 B) $560,000
 C) $460,000
 D) $672,000
 E) $552,000
2.0/2.0
Points Earned: 
Correct Answer(s): B

4. 
Ryan Company owns 80% of Chase Company. The
original balances presented for Ryan and Chase as of
January 1, 2011, are as follows:
Chase Company:
Shares outstanding
50,000
Book value
$400,000
Book value
$8
Ryan Company:
Shares owned of Chase
40,000

Book value of investment

$320,000

Assume Chase issues 30,000 additional shares
common stock solely to Ryan for $12 per share. What
is the new percent ownership Ryan owns in Chase?
 A) 75%
 B) 90%
 C) 82.5%
 D) 87.5%
 E) 80%
2.0/2.0
Points Earned: 
Correct Answer(s): D

5. 
Davidson, Inc. owns 70 percent of the outstanding 
voting stock of Ernest Company. On January 2, 2009,
Davidson sold 8 percent bonds payable with a 
$5,000,000 face value maturing January 2, 2029 at a 
premium of $400,000. On January 1, 2011, Ernest 
acquired 30 percent of these same bonds on the open 
market at 97.6. Both companies use the straight­line 
method of amortization. What adjustment should be 
made to Davidson's 2012 beginning Retained 
Earnings as a result of this bond acquisition? 

 A) $152,000.
 B) $114,000.
 C) $144,000.
 D) $122,000.
 E) $136,000.
Points Earned: 

2.0/2.0

Correct Answer(s): E

6. 
Ryan Company owns 80% of Chase Company. The
original balances presented for Ryan and Chase as of
January 1, 2011, are as follows:
Chase Company:
Shares outstanding
50,000
Book value
$400,000
Book value
$8
Ryan Company:
Shares owned of Chase
40,000
Book value of investment
$320,000
Assume Chase issues 30,000 additional shares
common stock solely to Ryan for $12 per share. After
acquiring the additional shares, what adjustment is
needed for Ryan's investment in Chase account?

 A) $70,000 increase
 B) $15,000 increase
 C) $70,000 decrease
 D) No adjustment is necessary
 E) $15,000 decrease
2.0/2.0
Points Earned: 
Correct Answer(s): E

7. 
If a subsidiary issues a stock dividend, which of the 
following statements is true? 
 A) Investment in subsidiary on the parent's books 
will decrease.
 B) Additional paid­in capital on the parent's books 
will decrease.
 C) Investment in subsidiary on the parent's books 
will increase.
 D) No adjustment is necessary.
 E) Additional paid­in capital on the parent's books 
will increase.
2.0/2.0
Points Earned: 
Correct Answer(s): D

8. 
Which of the following is true concerning the 
treasury stock approach in accounting for a 
subsidiary's investment in parent company stock? 
 A) The cost of parent shares is treated as if the 
shares are no longer issued.
 B) The original cost of the subsidiary's investment 
reduces long­term liabilities.
 C) The subsidiary must apply the equity method in 
accounting for the investment if the treasury stock 
approach is used.
 D) The treasury stock approach increases total 
stockholders' equity.
 E) The cost of parent shares is treated as if the shares
are no longer outstanding.
2.0/2.0
Points Earned: 
Correct Answer(s): E

9. 

Hardford Corp. held 80% of Inglestone Inc. which, in
turn, owned 80% of Jade Co. Operating income
figures (without investment income) as well as
unrealized upstream gains included in the income for
the current year follow:
Hardford Co.Ingleston Inc Jade Co.
Operating income
$560,000
$420,000
$280,000
Unrealized gains
70,000
42,000
84,000
The accrual-based income of Jade Co. is calculated
to be
 A) $144,000
 B) $189,000
 C) $201,000
 D) $193,000
 E) $196,000
Points Earned: 

2.0/2.0

Correct Answer(s): E

10. 

Paris, Inc. owns 80 percent of the voting stock of 
Stance, Inc. The excess total fair value over book 
value was $75,000. Stance holds 10 percent of the 
voting stock of Paris. The payment for that 
investment was in excess of book value and fair value
by $15,000. Any excess fair value is assigned to 
trademarks to be amortized over a 10­year period. 
During the current year, Paris reported operating 
income of $200,000 and dividend income from 
Stance of $20,000. At the same time, Stance reported 
operating income of $40,000 and dividend income 
from Paris of $5,000. What will be reported as the 
noncontrolling interest in Stance's net income? 
 A) $8,000.
 B) $9,000.
 C) $7,500.
 D) $1,000.
 E) $6,500.
2.0/2.0
Points Earned: 
Correct Answer(s): C

11. 

Beagle Co. owned 80% of Maroon Corp. Maroon
owned 90% of Eckston Inc. Operating income totals
for 2011 are shown below; these figures contained no
investment income. Amortization expense was not
required by any of these acquisitions. Included in
Eckston's operating income was a $56,000 unrealized
gain on intra-entity transfers to Maroon.
Beagle Co. Maroon Corp
Eckston
Inc.
Operating income$420,000
$280,000
$280,000
The accrual-based income of Maroon Corp. is
calculated to be
 A) $472,700
 B) $358,800
 C) $481,600
 D) $502,300
 E) $488,900
2.0/2.0
Points Earned: 
Correct Answer(s): C

12. 
Reggie, Inc. owns 70 percent of Nancy Corporation. 
During the current year, Nancy reported earnings 

before tax of $100,000 and paid a dividend of 
$30,000. The income tax rate for both companies is 
30 percent. What deferred income tax liability arising
in the current year must be recognized in the 
consolidated balance sheet? 
 A) $2,400.
 B) $2,940.
 C) $9,800.
 D) $1,680.
 E) $1,470.
2.0/2.0
Points Earned: 
Correct Answer(s): D

13. 
Prescott Corp. owned 90% of Bell Inc., while Bell 
owned 10% of the outstanding common shares of 
Prescott. No goodwill or other allocations were 
recognized in connection with either of these 
acquisitions. Prescott reported operating income of 
$266,000 for 2011 whereas Bell earned $98,000 
during the same period. No investment income was 
included within either of these income totals. How 
would the 10% investment in Prescott owned by Bell 
be presented in the consolidated balance sheet? 

 A) The 10% investment would be eliminated and no 
amount would be shown in the consolidated balance 
sheet.
 B) Prescott would treat the shares owned by Bell as 
if they had been repurchased on the open market, and
a treasury stock account would be set up on Prescott's
books recording the shares at their market value on 
the date of combination.
 C) The 10% investment would be included as part of
Additional Paid­In Capital because it is less than 20%
and therefore indicates no significant influence is 
present.
 D) The 10% investment would be eliminated and the
same dollar amount would appear as treasury stock in
the consolidated balance sheet.
 E) The 10% investment would be reclassified in 
Bell's balance sheet as Treasury Stock before the 
consolidation process begins.
2.0/2.0
Points Earned: 
Correct Answer(s): D

14. 
Evanston Co. owned 60% of Montgomery Corp. 
Montgomery owned 75% of Noir Inc., and Noir 

owned 15% of Montgomery. This pattern of 
ownership would be called 
 A) an affiliated group.
 B) indirect control.
 C) direct control.
 D) a connecting affiliation.
 E) mutual ownership.
2.0/2.0
Points Earned: 
Correct Answer(s): E

15. 
All of the following are required to be reported in 
interim financial statements for a material operating 
segment except: 
 A) Segment profit or loss.
 B) Reconciliation of segment profit or loss to total 
income before taxes.
 C) Segment assets.
 D) Intersegment revenues.
 E) Segment revenues from external customers.
0.0/2.0
Points Earned: 
Correct Answer(s): C

16. 
Which of the following items of information are 
required to be included in interim reports for each 
operating segment?
(I.) Revenues from external customers
(II.) Segment profit or loss
(III.) Reconciliation of segment profit or loss to the 
enterprise's total income before taxes
(IV.) Intersegment revenues
 A) I, II and III
 B) I and III only
 C) I, II, III, and IV
 D) I and II only
 E) II and III only
2.0/2.0
Points Earned: 
Correct Answer(s): C

17. 
Which of the following is not one of the criteria 
management should consider in determining whether 
business activities and environments of an operating 
segment are similar? 

 A) The nature of the regulatory environment, if 
applicable.
 B) The geographical location of the operations.
 C) The distribution methods.
 D) The nature of the production process.
 E) The type or class of customer.
2.0/2.0
Points Earned: 
Correct Answer(s): B

18. 
The Fratilo Co. had three operating segments with the
following information:
Pens
Pencils Erasers
Sales to outsiders $11,200 $5,600
$8,400
Intersegment revenues
840
1,400 1,960
In addition, revenues generated at corporate
headquarters are $1,400. Combined segment revenues
are calculated to be
 A) $25,200
 B) $28,000
 C) $27,300

 D) $26,600
 E) $29,400
Points Earned: 

2.0/2.0

Correct Answer(s): E

19. 
How should revenues be recognized in interim 
periods? 
 A) There are no revenues recognized in interim 
periods.
 B) On an annualized basis.
 C) In the same way as they are recognized on an 
annual basis.
 D) On a seasonal basis.
 E) On the cash basis.
2.0/2.0
Points Earned: 
Correct Answer(s): C

20. 
When defining a reportable segment, which of the 
following conditions would be sufficient to allow a 

company to combine two operating segments for 
purposes of testing? 
 A) Both segments are owned by the same parent 
company.
 B) The segments may sell different products, but 
they have a similar production process.
 C) Both segments have several customers in 
common.
 D) The products sold by each segment are produced 
in the same plant.
 E) Both segments are required to adhere to U.S. 
Department of Labor regulations regarding 
immigration laws.
2.0/2.0
Points Earned: 
Correct Answer(s): B

21. 
Cement Company, Inc. began the first quarter with 
1,000 units of inventory costing $25 per unit. During 
the first quarter, 3,000 units were purchased at a cost 
of $40 per unit, and sales of 3,400 units at $65 per 
units were made. During the second quarter, the 
company expects to replace the units of beginning 
inventory sold at a cost of $45 per unit. Cement 

Company uses the LIFO method to account for 
inventory. The amount of gross profit for the first 
quarter is: 
 A) $250,000
 B) $87,000
 C) $221,000
 D) $90,000
 E) $83,000
2.0/2.0
Points Earned: 
Correct Answer(s): E

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