Lent Corporation Converts to S Corporation Status in 2019

question 104

Multiple Choice

Lent Corporation converts to S corporation status in 2019. Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000) . How much tax must be added to the C corporation tax liability for the year before the S election in 2020?

• A) $-0-.
• B) $7,350.
• C) $29,400.
• D) $140,000.

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the last items placed in inventory are the first to be used or sold.

Inventory Control

The supervision of the supply, storage, and accessibility of items in order to ensure an adequate supply without excessive oversupply.

Petty Cash Voucher

A document used to record and authorize the use of cash from a petty cash fund for small, immediate expenses.

Control Over Inventory

Refers to the processes and measures a business undertakes to manage its inventory efficiently, ensuring adequate stock levels, and minimizing costs.