During 2011, the Lianro Company Had Sales of $375,000 and Cost

question 87

Multiple Choice

During 2011, the Lianro Company had sales of $375,000 and cost of goods sold of $281,250. Merchandise inventory at the beginning of the year was $118,000 and at the end of the year, it was $124,000. The return on investment in inventory was:

• A) 4.8%
• B) 75.6%
• C) 77.5%
• D) 232%

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Definitions:

Sales Commission

A portion of the sale price of goods or services paid to the salesperson as a reward for making the sale.

Wash Sale Rules

IRS regulations that disallow the claim of a capital loss for tax purposes if a substantially identical security is purchased within 30 days before or after the sale.

Loss Disallowed

A financial loss that cannot be deducted from taxable income as per tax regulations, often due to specific restrictions or limitations.

Personal Residence

The primary dwelling in which a person lives, often eligible for certain tax benefits, like the deduction of mortgage interest and property taxes.