Question: 1) The following data concerning the retail inventory method are taken from the financial records of Welch Company. Cost Retail Beginning inventory $ 196,000 $
1) The following data concerning the retail inventory method are taken from the financial records of Welch Company.
| Cost | Retail | |||
| Beginning inventory | $ 196,000 | $ 280,000 | ||
| Purchases | 896,000 | 1,280,000 | ||
| Freight-in | 24,000 | |||
| Net markups | 80,000 | |||
| Net markdowns | 56,000 | |||
| Sales | 1,344,000 |
If the foregoing figures are verified and a count of the ending inventory reveals that merchandise actually on hand amounts to $144,000 at retail, the business has
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| realized a windfall gain. |
|
| sustained a loss. |
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| no gain or loss as there is close coincidence of the inventories. |
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| none of these answer choices are correct. |
2) A machine cost $1213000, has annual depreciation of $201000, and has accumulated depreciation of $947000 on December 31, 2017. On April 1, 2018, when the machine has a fair value of $276000, it is exchanged for a machine with a fair value of $1352000 and the proper amount of cash is paid. The exchange had commercial substance. The gain to be recorded on the exchange is
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| $60250 |
|
| $65000 |
|
| $139000 |
|
| $0 |
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