19. The trading securities owned by a company are:

a. reported on the balance sheet as a current asset.+

b. reported on the balance sheet as a noncurrent asset.

c. reported on the balance sheet as a contra-equity account.

d. reported on the balance sheet as a reduction of liabilities.

e. reported on the income statement as part of investment revenue

20. During its first year of operation, Lenton Company acquired three investments in trading securities. Investment A cost $50,000 and had a year-end market value of $60,000. Investment B cost $35,000 and had a year-end market value of $17,000. Investment C cost $26,000 and had a year-end market value of $24,000. The journal entry to record the decline in market value would include:

a. a debit to Unrealized Loss on Trading Securities.+

b. a credit to Unrealized Gain on Trading Securities.

c. a debit to Trading Securities.

d. At least two of the above.

e. both (a) and (c)

21. Ritz Company agreed to purchase certain inventory items from Hostess Corporation. Hostess shipped the goods F.O.B. destination. On December 31, Ritz's accounting year-end, Ritz was aware that the goods had been shipped and would be received any day.

a. Ritz should include the goods in its inventory calculated on December 31.

b. Ritz should include the goods in its inventory calculated on December 31, but should not record the obligation to pay for them.

c. Ritz should not include the goods in its inventory calculated on December 31, but should include the related payable on its balance sheet at December 31.

d. Ritz should not include the goods in its inventory calculated on December 31, and should not include the related payable on its balance sheet at December 31.+

e. all of the above are unrelated

22. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2 Beginning Inventory 500 units at $3.00

April 7 Purchased 1,100 units at $3.20

June 30 Purchased 400 units at $4.00

December 7 Purchased 1,600 units at $4.40

Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:

a. $2,780

b. $3,960

c. $9,700

d. $10,880+

e. $11,200

23. Which of the following inventory methods will always produce the same results under both a periodic and perpetual system?

a. FIFO+

b. LIFO

c. Average

d. All of these

e. None of the above

24. Wonder Corporation failed to record the purchase of merchandise on account. The merchandise and related accounts payable should have been recorded but were not. What is the effect of these errors on assets, liabilities, retained earnings, and net income, respectively?

a. Understated, understated, no effect, no effect+

b. Understated, understated, understated, understated

c. Understated, overstated, overstated, understated

d. Overstated, overstated, understated, overstated

e. Correct, overstated, understated, overstated

25. Gerber Department Store utilizes the retail inventory method. Gerber's beginning inventory cost $140,000 and retailed for $280,000. Purchases for the period amounted to $390,000 and were priced to sell at twice that amount. Sales for the period, all at normal retail, were $600,000. How much is the cost of Gerber's estimated ending inventory?

a. $115,000

b. $150,000

c. $230,000+

d. $300,000

e. $$270,000