Question 1

Sandra,Inc.had 200 units of inventory on hand at the end of the year.These were recorded at a cost of $16 each using the last-in,first-out (LIFO)method.The current replacement cost is $12 per unit.The selling price charged by Sandra,Inc.for each finished product is $20.In order to record the adjusting entry needed under the lower-of-cost-or-market rule,the Cost of Goods Sold will be ________.

Accepted Answer

A) debited by $2,400 
B) credited by $2,400 
C) debited by $800 
D) credited by $800

Question 2

Blue Sky,Inc.sold 500 units of inventory at $25 per unit for cash.The company uses the perpetual inventory system.The cost of the units sold was $10 per unit.Provide the journal entries to record the sale.

Accepted Answer

The answer of Blue Sky,Inc.sold 500 units of inventory at...

Question 3

The ending inventory of a company was $450,000 as per the perpetual inventory records.The current replacement cost for the ending inventory is $410,000.Prepare the journal entry to adjust inventory.

Accepted Answer

The answer of The ending inventory of a company was...

Question 4

Which of the following is the correct formula to calculate average merchandise inventory?

Accepted Answer

A) Average merchandise inventory = (Beginning merchandise inventory - Ending merchandise inventory)/ 2 
B) Average merchandise inventory = (Beginning merchandise inventory × Ending merchandise inventory)/ 2 
C) Average merchandise inventory = (Beginning merchandise inventory / Ending merchandise inventory)/ 2 
D) Average merchandise inventory = (Beginning merchandise inventory + Ending merchandise inventory)/ 2

Question 5

Which of the following inventory costing methods results in the lowest value of ending inventory during a period of rising inventory costs?

Accepted Answer

A) specific identification 
B) weighted-average 
C) last-in,first-out 
D) first-in,first-out

Question 6

Jason Retail had the following balances and transactions during 2017.

The company maintains its records of inventory on a perpetual basis using the FIFO inventory costing method.Calculate the amount of ending Merchandise Inventory at December 31,2017 using the lower-of-cost-or-market rule.

Accepted Answer

A) $2,940 
B) $3,010 
C) $3,440 
D) $5,160

Question 7

Which of the following states that the business should use the same accounting methods from period to period?

Accepted Answer

A) materiality concept 
B) consistency principle 
C) conservatism 
D) disclosure principle

Question 8

Which of the following inventory costing methods uses the costs of the oldest purchases to calculate the value of the ending inventory?

Accepted Answer

A) specific identification 
B) weighted-average 
C) last-in,first-out 
D) first-in,first-out

Question 9

When using the periodic inventory system and weighted-average inventory costing method,when is the weighted average cost per unit computed?

Accepted Answer

The answer of When using the periodic inventory system and...

Question 10

The disclosure principle states that a company should disclose all major accounting methods and procedures in the ________.

Accepted Answer

A) balance sheet 
B) income statement 
C) footnotes to the financial statements 
D) internal accounting documents

Question 11

Modern Décor Furniture began June with merchandise inventory of 45 sofas that cost a total of $31,500.During the month,Modern Décor purchased and sold merchandise on account as follows:
  
Prepare a perpetual inventory record,using the FIFO inventory costing method,and determine the company's cost of goods sold,ending merchandise inventory,and gross profit.

Accepted Answer

The answer of Modern Décor Furniture began June with merchandise...

Question 12

Which of the following is the correct formula to calculate weighted-average unit cost for merchandise inventory?

Accepted Answer

A) Weighted-average unit cost = Cost of goods available for sale + Number of units available 
B) Weighted-average unit cost = Cost of goods available for sale × Number of units available 
C) Weighted-average unit cost = Cost of goods available for sale - Number of units available 
D) Weighted-average unit cost = Cost of goods available for sale / Number of units available

Question 13

A company uses the weighted-average method of inventory valuation under a periodic inventory system.The company began the year with a zero inventory balance.They had the following transactions during the year.
1.Purchased 62 units at $7 per unit
2.Purchased 110 units at $7 per unit
3.Sold 90 units at $10 per unit
4.Purchased 50 units at $8 per unit
5.Sold 90 units at $13.50 per unit
At the end of the year,the company counted the inventory and found 42 units remaining.Calculate the cost of goods sold for the year.(Round the unit costs to two decimal places and total costs to the nearest dollar. )

Accepted Answer

A) $7 
B) $304 
C) $1,604 
D) $1,300

Question 14

Which of the following inventory costing methods yields the lowest net income during a period of rising inventory costs?

Accepted Answer

A) specific identification 
B) weighted-average 
C) last-in,first-out 
D) first-in,first-out

Question 15

A company that uses the perpetual inventory system sold goods for $2,500 to a customer on account.The company had purchased the inventory for $500.Which of the following journal entries correctly records the cost of goods sold?

Accepted Answer

A) 
 
B) 
 
C) 
 
D)

Question 16

Open Space Furniture began June with merchandise inventory of 45 sofas that cost a total of $31,500.During the month,Open Space purchased and sold merchandise on account as follows:
  
Prepare a perpetual inventory record,using the LIFO inventory costing method,and determine the company's cost of goods sold,ending merchandise inventory,and gross profit.

Accepted Answer

The answer of Open Space Furniture began June with merchandise...

Question 17

Complete the following table,which compares the effects of LIFO,FIFO and weighted-average inventory costing methods on the financial statements in periods of declining inventory costs.The answer should be lowest,highest,or middle.

Accepted Answer

The answer of Complete the following table,which compares the effects...

Question 18

Cobbe Sales sold 400 units of product to a customer on account.The selling price was $28 per unit,and the cost,according to the company's inventory records,was $14 per unit.Provide the journal entry to record the cost of goods sold.(Assume a perpetual inventory system. )

Accepted Answer

The answer of Cobbe Sales sold 400 units of product...

Question 19

Which of the following is the correct formula to calculate inventory turnover?

Accepted Answer

A) Inventory turnover = Cost of goods sold / Average merchandise inventory 
B) Inventory turnover = Cost of goods sold × Average merchandise inventory 
C) Inventory turnover = Cost of goods sold + Average merchandise inventory 
D) Inventory turnover = Cost of goods sold - Average merchandise inventory

Question 20

Given the same purchase and sales data,and assuming the cost of inventory is rising,the costing methods for inventory will result in different amounts for cost of goods sold.

Accepted Answer

A) True 
 B)False

Exam 6: Merchandise Inventory

Blue Sky,Inc.sold 500 units of inventory at $25 per unit for cash.The company uses the perpetual inventory system.The cost of the units sold was $10 per unit.Provide the journal entries to record the sale.

The ending inventory of a company was $450,000 as per the perpetual inventory records.The current replacement cost for the ending inventory is $410,000.Prepare the journal entry to adjust inventory.

Which of the following is the correct formula to calculate average merchandise inventory?

Which of the following inventory costing methods results in the lowest value of ending inventory during a period of rising inventory costs?

Jason Retail had the following balances and transactions during 2017. The company maintains its records of inventory on a perpetual basis using the FIFO inventory costing method.Calculate the amount of ending Merchandise Inventory at December 31,2017 using the lower-of-cost-or-market rule.

Which of the following states that the business should use the same accounting methods from period to period?

Which of the following inventory costing methods uses the costs of the oldest purchases to calculate the value of the ending inventory?

When using the periodic inventory system and weighted-average inventory costing method,when is the weighted average cost per unit computed?

The disclosure principle states that a company should disclose all major accounting methods and procedures in the ________.

Which of the following is the correct formula to calculate weighted-average unit cost for merchandise inventory?

Which of the following inventory costing methods yields the lowest net income during a period of rising inventory costs?

A company that uses the perpetual inventory system sold goods for $2,500 to a customer on account.The company had purchased the inventory for $500.Which of the following journal entries correctly records the cost of goods sold?

Complete the following table,which compares the effects of LIFO,FIFO and weighted-average inventory costing methods on the financial statements in periods of declining inventory costs.The answer should be lowest,highest,or middle.

Cobbe Sales sold 400 units of product to a customer on account.The selling price was $28 per unit,and the cost,according to the company's inventory records,was $14 per unit.Provide the journal entry to record the cost of goods sold.(Assume a perpetual inventory system. )

Which of the following is the correct formula to calculate inventory turnover?

Given the same purchase and sales data,and assuming the cost of inventory is rising,the costing methods for inventory will result in different amounts for cost of goods sold.