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Homework answers / question archive / 1)Determine the ending inventory using the periodic inventory system and the LIFO inventory method:   Date Item Units   Cost   Total   June 1 Beginning Inventory 6   $5   $30   June 12 Purchase 10   $6   $60   June 18 Purchase 8   $7   $56     Totals 24   -   $146     Assume that 18 units were sold at a sales price of $14

1)Determine the ending inventory using the periodic inventory system and the LIFO inventory method:   Date Item Units   Cost   Total   June 1 Beginning Inventory 6   $5   $30   June 12 Purchase 10   $6   $60   June 18 Purchase 8   $7   $56     Totals 24   -   $146     Assume that 18 units were sold at a sales price of $14

Accounting

1)Determine the ending inventory using the periodic inventory system and the LIFO inventory method:

 

Date

Item

Units

 

Cost

 

Total

 

June 1

Beginning Inventory

6

 

$5

 

$30

 

June 12

Purchase

10

 

$6

 

$60

 

June 18

Purchase

8

 

$7

 

$56

 

 

Totals

24

 

-

 

$146

 

 

Assume that 18 units were sold at a sales price of $14.

  1. $56.
  2. $30.
  3. $146.
  4. $60.

 

LIFO

  1. @ $7 and 10 @ $6 → × 7 = 56 and 10 × 6 = 60 → 56 + 60 = 116 → 146 – 116 = 30

 

2 Determine the ending inventory using the periodic inventory system and the weighted average cost method (rounded to the closest cent):

 

Date

Item

Units

 

Cost

 

Total

 

June 1

Beginning Inventory

6

 

$5

 

$30

 

June 12

Purchase

10

 

$6

 

$60

 

June 18

Purchase

8

 

$7

 

$56

 

 

Totals

24

 

-

 

$146

 

 

Assume that 18 units were sold at a sales price of $14.

  1. $145.92.
  2. $109.44.
  3. $56.00.
  4. $36.48.

 

Weighted Average

  1. ÷ 24 ≈ 6.10 → 6.10 × 18 = 109.8 → – 109.8 = 36.2 → 36.2 ≈ 36.48

 

3 Determine the cost of merchandise sold for the transaction on October 25 using the perpetual inventory system and the FIFO method.

 

Date

Item

Units

 

Cost

 

Total

 

 

Beginning Inventory

5

 

$10

 

$50

 

October 4

Purchase

8

 

$11

 

$88

 

October 8

Sale

6

 

 

 

 

 

October 20

Purchase

15

 

$12

 

$180

 

October 25

Sale

12

 

 

 

 

 

 

  1. $105.
  2. $138.
  3. $137.
  4. $180.

 

Date

Sale/Cost of Merchandise

Purchase

Inventory

 

 

 

5 × $10 = $50

October 4

 

8 × $11 = $88

5 × $10 = $50

8 × $11 = $88

October 8

5 × $10 = $50

1 × $11 = $11

 

7 × $11 = $77

October 20

 

15 × $12 = $180

7 × $11 = $77

15 × $12 = $180

October 25

7 × $11 = $77

5 × $12 = $60

 

10 × $12 = $120

TOTAL

$77 + $60 = $137

0

120

 

  1. The cost method that will yield the highest taxable income during times of inflation is the
  1. Specific identification inventory cost method.
  2. Weighted average inventory cost method.
  3. LIFO inventory cost method.
  4. FIFO inventory cost method.

 

  1. Number of days' sales in inventory is calculated as
  1. Average Inventory Average Daily Cost of Merchandise Sold
    .
  2. Sales (net)Average Daily Cost of Merchandise Sold
    .
  3. Sales (net)365 days
    .
  4. Cost of Merchandise SoldAverage Inventory
    .

 

  1. Determine the ending inventory assuming that only one item was sold on March 24 for $14 using the LIFO cost flow method.

 

Date

Item

Units

 

Cost

 

Total

 

March 3

Purchase

1

 

$4

 

$4

 

March 8

Purchase

1

 

$6

 

$6

 

March 22

Purchase

1

 

$8

 

$8

 

 

Totals

3

 

$18

 

 

 

 

  1. $15.
  2. $16.
  3. $14.
  4. $10.

 

LIFO

1 @ $8 → 1 × 8 = 8 → 18 – 8 = 10

 

  1. The inventory is added to the inventory records after three documents are reconciled. One of those documents is the
  1. Sales invoice.
  2. Receiving report.
  3. Company check.
  4. Sales receipt.

 

  1. Several controls are used to safeguard inventory, and one of those is to
  1. Allow one employee to order inventory, check in shipments, and stock shelves with inventory to prevent errors.
  2. Hire security guards.
  3. Keep low-priced inventory behind lock and key.
  4. Allow all employees access to the materials warehouse.

 

  1. The cost method that will yield an ending inventory value that is somewhere between possible high and low prices using traditional costing methods is the
  1. LIFO inventory cost method.
  2. Specific identification inventory cost method.
  3. Weighted average inventory cost method.
  4. FIFO inventory cost method.

 

  1. A physical inventory is used to
  1. All of these choices are correct.
  2. Investigate major errors.
  3. Help prevent employee thefts or misuses of inventory.
  4. Compare physical inventory to book inventory.

 

  1. Determine the gross profit using the periodic inventory system and the FIFO inventory method:

 

Date

Item

Units

 

Cost

 

Total

 

June 1

Beginning Inventory

6

 

$5

 

$30

 

June 12

Purchase

10

 

$6

 

$60

 

June 18

Purchase

8

 

$7

 

$56

 

 

Totals

24

 

-

 

$146

 

 

Assume that 18 units were sold at a sales price of $14.

  1. $148.
  2. $252.
  3. $104.
  4. $152.

 

Gross profit

6 @ $5, 10 @ $6, and 2 @ $7 → 2 × $7 = 14 → 30 + 60 + 14 = 104 → 18 × 14 = 252 → 252 – 104 = 148

 

  1. Determine the cost of merchandise sold for the transaction on October 8 using the perpetual inventory system and the LIFO method.

 

Date

Item

Units

 

Cost

 

Total

 

 

Beginning Inventory

5

 

$10

 

$50

 

October 4

Purchase

8

 

$12

 

$96

 

October 8

Sale

6

 

 

 

 

 

October 20

Purchase

15

 

$14

 

$210

 

October 25

Sale

12

 

 

 

 

 

 

  1. $62.
  2. $72.
  3. $96.
  4. $210.

 

 

  1. Determine the ending inventory assuming that only one item was sold on March 24 for $14 using the FIFO cost flow method.

 

Date

Item

Units

 

Cost

 

Total

 

March 3

Purchase

1

 

$6

 

$6

 

March 8

Purchase

1

 

$7

 

$7

 

March 22

Purchase

1

 

$8

 

$8

 

 

Total

3

 

$21

 

 

 

 

  1. $14.
  2. $13.
  3. $15.
  4. $7.

 

FIFO

1 @ $6 → 21 – 6 = 15

 

  1. Financial statement data for December 31, 20, for Alpine Company is shown below:

 

Cost of merchandise sold

$1,050,000

Inventories:

 

Beginning of year

$380,000

End of year

$320,000

 

Determine inventory turnover for 2014.

  1. 3.0.
  2. 2.8.
  3. 1.2.
  4. 3.3.        

 

Inventory turnover

1,050,000[380,000+320,000÷2]=3

 

 

  1. During the taking of the physical inventory, the company inadvertently counted its inventory as $89,000 instead of the correct amount of $87,000. Indicate the effect of the misstatement on the balance sheet of the current year.
  1. Owner's equity is overstated by $2,000.
  2. Liabilities are overstated by $2,000.
  3. Owner's equity is understated by $2,000.
  4. Assets are understated by $2,000.

 

Balance sheet error

89,000 – 87,000 = 2,000

 

  1. Determine the gross profit assuming that only one item was sold on March 24 for $14 using the weighted average cost flow method.

 

Date

Item

Units

 

Cost

 

Total

 

March 3

Purchase

1

 

$4

 

$4

 

March 8

Purchase

1

 

$6

 

$6

 

March 22

Purchase

1

 

$8

 

$8

 

 

Totals

3

 

$18

 

 

 

 

  1. $8.
  2. $6.
  3. $14.
  4. $7.

 

Gross profit

 

 

  1. When the weighted average cost method is used for the perpetual inventory system, a weighted average unit cost for each item is determined
  1. None of these choices are correct.
  2. at the beginning of the time period.
  3. each time a purchase is made.
  4. at the end of the time period.

 

  1. Financial statement data for December 31, 2014, for Alpine Company is shown below:

 

Cost of merchandise sold

$1,050,000

Inventories:

 

Beginning of year

$380,000

End of year

$320,000

 

Determine the number of days' sales in inventory for 2014.

  1. 118.8 days.
  2. 111.2 days.
  3. 132.1 days.
  4. 121.7 days.

 

Number of days' sales in inventory

[380,000+320,000÷2](1,050,000÷365)≈121.66→121.7

 

 

  1. The cash, land, inventory, and accounts receivable are listed in the balance sheet. Which of the following is the correct order they should be found on the balance sheet?
  1. Inventory, accounts receivable, cash, land.
  2. Cash, inventory, accounts receivable, land.
  3. Cash, accounts receivable, inventory, land.
  4. Land, inventory, accounts receivable, cash.

 

  1. The cost method that will yield an ending inventory that is closer to current prices is the
  1. Weighted average inventory cost method.
  2. LIFO inventory cost method.
  3. FIFO inventory cost method.
  4. Specific identification inventory cost method.

 

  1. During the taking of the physical inventory, the company inadvertently counted its inventory as $34,000 instead of the correct amount of $43,000. Indicate the effect of the misstatement on the balance sheet of the current year.
  1. Owner's equity is overstated by $9,000.
  2. Liabilities are overstated by $9,000.
  3. Assets are overstated by $9,000.
  4. Assets are understated by $9,000.

 

Balance sheet error

34,000 – 43,000 = 9,000

 

 

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