American Military University - ACCT 302

1)Northwest Fur Co. started 2016 with $96,000 of merchandise inventory on hand. During 2016, $560,000 in merchandise was purchased on account with credit terms of 3/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $9,400. Merchandise with an invoice amount of $4,200 was returned for credit. Cost of goods sold for the year was $362,000. Northwest uses a perpetual inventory system.

 

What is ending inventory assuming Northwest uses the gross method to record purchases?

$303,400.

$299,200.

$282,466.

$282,526.

 

 

2. Northwest Fur Co. started 2016 with $95,000 of merchandise inventory on hand. During 2016, $580,000 in merchandise was purchased on account with credit terms of 3/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $7,500. Merchandise with an invoice amount of $4,900 was returned for credit. Cost of goods sold for the year was $363,000. Northwest uses a perpetual inventory system.

 

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

$660,200.

$684,900.

$677,600.

$660,347.

 

 

3. Cinnamon Buns Co. (CBC) started 2016 with $53,600 of merchandise on hand. During 2016,

$282,000 in merchandise was purchased on account with credit terms of 3/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,800. Merchandise with an invoice amount of $3,400 was returned for credit. Cost of goods sold for the year was $307,000. CBC uses a perpetual inventory system.

 

Assuming CBC uses the gross method to record purchases, ending inventory would be:

$35,000.

$16,842.

$26,540.

$26,642.

 

 

4. Cinnamon Buns Co. (CBC) started 2016 with $53,400 of merchandise on hand. During 2016,

$286,000 in merchandise was purchased on account with credit terms of 1/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $11,000. Merchandise with an invoice amount of $3,700 was returned for credit. Cost of goods sold for the year was $314,000. CBC uses a perpetual inventory system.

 

What is cost of goods available for sale, assuming CBC uses the gross method?

$321,877.

$350,400.

$346,700.

$343,877.

 

5. Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):

• 45 units at $100
• 74 units at $70
• 172 units at $52

Sales for the year totaled 268 units, leaving 23 units on hand at the end of the year. Ending inventory using the average cost method is (Do not round unit cost calculation. Round your final answer to the nearest whole dollar amount):

 

$1,485.

$1,472.

$1,522.

$1,497.

 

 

6. Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):

• 43 units at $90
• 70 units at $72
• 170 units at $59

Sales for the year totaled 275 units, leaving 8 units on hand at the end of the year. Ending inventory using the FIFO method is:

$522.

$472.

$535.

$720.

 

 

7. Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):

• 44 units at $106
• 72 units at $78
• 172 units at $65

Sales for the year totaled 270 units, leaving 18 units on hand at the end of the year.

 

Ending inventory using the LIFO method is:

$1,341.

$1,170.

$1,908.

$1,220.

 

8. Nu Company reported the following pretax data for its first year of operations.

 

Net sales	2,820
Cost of goods available for sale	2,450
Operating expenses	810
Effective tax rate	30%
Ending inventories:
If LIFO is elected	910
If FIFO is elected	1,210

 

What is Nu's net income if it elects FIFO?

$1,580.

$329.

$770.

$539.

 

 

9. Nu Company reported the following pretax data for its first year of operations.

 

Net sales	2,990
Cost of goods available for sale	2,380
Operating expenses	690
Effective tax rate	30%
Ending inventories:
If LIFO is elected	990
If FIFO is elected	1,130

 

What is Nu's net income if it elects LIFO?

$637.

$1,050.

$910.

$735.

 

 

10. Nueva Company reported the following pretax data for its first year of operations.

 

Net sales	7,510
Cost of goods available for sale	5,780
Operating expenses	1,578
Effective tax rate	35%
Ending inventories:
If LIFO is elected	635
If FIFO is elected	817