Question 1

Under which of the following inventory costing methods is the ending inventory based on the costs of the most recent purchases?

Accepted Answer

The first-in, first-out (FIFO) method assumes that the first items purchased are the first ones sold, and the ending inventory is based on the costs of the most recent purchases.

Question 2

Which of the following statements regarding FIFO is incorrect?

Accepted Answer

FIFO (First-In, First-Out) is not a specific identification costing method. Specific identification tracks the actual cost of each specific item sold, whereas FIFO assumes that the first items purchased are the first sold, regardless of the actual flow of specific items.

Question 3

A company purchased 200 units for $30 each on January 31.It purchased 220 units for $33 each on February 28.It sold a total of 350 units for $45 each from March 1 through December 31.What is the cost of ending inventory on December 31 if the company uses the first-in,first-out (FIFO)inventory costing method? (Assume that the company uses a perpetual inventory system. )

Accepted Answer

A)Ending merchandise inventory = (200 + 220 - 350)× $33 = 11ea8a75_420a_ebe2_a2a1_93d73dd3cb98_TB6701_00

Question 4

Costas Company purchased inventory on account for $6,500.Prepare the journal entry to record the purchase of inventory on account.(Assume a perpetual inventory system. )Omit explanation.

Accepted Answer

The answer of Costas Company purchased inventory on account for...

Question 5

James Sales sold 450 units of product to a customer on account.The company uses the perpetual inventory system and the FIFO inventory costing method.The selling price was $28 per unit,and the cost,according to the company's inventory records,was $12 per unit.Prepare the journal entries to record the sale.Omit explanations.

Accepted Answer

The answer of James Sales sold 450 units of product...

Question 6

Baldwin Company had the following balances and transactions during 2019:  What would be reported as Cost of Goods Sold on the income statement for the year ending December 31,2019 if the perpetual inventory system and the first-in,first-out inventory costing method are used?

Accepted Answer

D) 11ea8a75_420b_6115_a2a1_9fa2389bc3b6_TB6701_00

Question 7

A company that uses the perpetual inventory system sold goods to a customer for cash for $4,600.The cost of the goods sold was $1,000.Which of the following journal entries correctly records this transaction?

Accepted Answer

In the perpetual inventory system, the cost of the goods sold is immediately recognized as an expense at the time of sale. Therefore, the journal entry should credit Inventory for the cost of the goods sold and debit Cash for the amount received. Choice B correctly records this transaction with a debit to Cash for $4,600 and a credit to Inventory for $1,000.

Question 8

Western Sky Company sold 500 units of inventory at $25 per unit for cash.The company uses the perpetual inventory system and the FIFO inventory costing method.The beginning inventory included 550 units at a cost of $15 per unit.The cost of the most recent purchases is $10 per unit.Prepare the journal entries to record the sale.Omit explanations.

Accepted Answer

The answer of Western Sky Company sold 500 units of...

Question 9

The total cost spent on inventory that was available to be sold during a period is called the cost of goods sold.

Accepted Answer

The total cost spent on inventory that was available to be sold during a period is called the cost of goods available for sale.

Question 10

Countrywide 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.Prepare the journal entry to record the cost of goods sold.(Assume a perpetual inventory system and the FIFO inventory costing method. )Omit explanation.

Accepted Answer

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

Question 11

A company purchased 130 units for $30 each on January 31.It purchased 150 units for $35 each on February 28.It sold 150 units for $80 each from March 1 through December 31.If the company uses the first-in,first-out inventory costing method,what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system. )

Accepted Answer

C) 11ea8a75_420b_12f3_a2a1_47fa7d27bbc7_TB6701_00 Number of units sold = 150 units.As FIFO is used,130 units will be valued at $30 per unit (Jan 31)and remaining 20 units will be valued at $35 per unit (Feb 28. )
Cost of Goods Sold = ((130 units × $30)+ (20 units × $35))= $3,900 + $700 = $4,600

Question 12

When a company uses the first-in,first-out (FIFO)method,the cost of goods sold represents the cost of the most recently purchased goods and the value of ending inventory represents the cost of the oldest goods in stock.

Accepted Answer

When a company uses the first-in,first-out (FIFO)method,the cost of goods sold represents the oldest purchases and the value of ending inventory represents the most recent purchases.

Question 13

Nichols Company had the following balances and transactions during 2018:  What would be reported for Ending Merchandise Inventory on the balance sheet at December 31,2018 if the perpetual inventory system and the first-in,first-out inventory costing method are used?

Accepted Answer

C) 11ea8a75_420b_8827_a2a1_4199e1005426_TB6701_00 Ending Merchandise Inventory = $75,600 - $36,500 = $39,100

Question 14

A company that uses the perpetual inventory system sold goods for $2,400 to a customer on account.The company had purchased the inventory for $800.Which of the following journal entries correctly records the cost of goods sold?

Accepted Answer

The answer of A company that uses the perpetual inventory...

Question 15

Which of the following inventory costing methods uses the cost of the oldest purchases to compute the cost of goods sold?

Accepted Answer

The first-in, first-out (FIFO) method uses the cost of the oldest purchases to compute the cost of goods sold, assuming that the first items purchased are the first ones sold.

Question 16

Meadows Company sold 500 units of inventory at $25 per unit on account.The company uses the perpetual inventory system and the FIFO inventory costing method.The beginning inventory included 400 units at $15 per unit.The most recent purchases include 600 units at $18 per unit.Prepare the journal entries to record the sale.Omit explanations.

Accepted Answer

The answer of Meadows Company sold 500 units of inventory...

Question 17

A company that uses the perpetual inventory system sold goods to a customer on account for $2,300.The cost of the goods sold was $1,150.Which of the following journal entries correctly records this transaction?

Accepted Answer

The answer of A company that uses the perpetual inventory...

Question 18

Modern Lifestyle Furniture began June with merchandise inventory of 45 sofas that cost a total of $31,500.During the month,Modern 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 Lifestyle Furniture began June with merchandise...

Question 19

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $7,000 and paid $800 for the freight-in.The company sold the whole lot to a supermarket chain for $15,000 on account.Which of the following entries correctly records the sale?

Accepted Answer

The answer of A company that uses the perpetual inventory...

Question 20

First Street Merchandisers has total cost of goods sold of $54,500,total beginning inventory of $18,500,and total ending inventory of $22,100.Cost of goods available for sale is $73,000

Accepted Answer

Cost of goods sold $54,500 plus ending inventory $22,100 equals cost of goods available for sale $76,600

Quiz 6: Merchandise Inventory

Under which of the following inventory costing methods is the ending inventory based on the costs of the most recent purchases?

Which of the following statements regarding FIFO is incorrect?

Costas Company purchased inventory on account for $6,500.Prepare the journal entry to record the purchase of inventory on account.(Assume a perpetual inventory system. )Omit explanation.

Baldwin Company had the following balances and transactions during 2019: What would be reported as Cost of Goods Sold on the income statement for the year ending December 31,2019 if the perpetual inventory system and the first-in,first-out inventory costing method are used?

A company that uses the perpetual inventory system sold goods to a customer for cash for $4,600.The cost of the goods sold was $1,000.Which of the following journal entries correctly records this transaction?

The total cost spent on inventory that was available to be sold during a period is called the cost of goods sold.

When a company uses the first-in,first-out (FIFO)method,the cost of goods sold represents the cost of the most recently purchased goods and the value of ending inventory represents the cost of the oldest goods in stock.

Nichols Company had the following balances and transactions during 2018: What would be reported for Ending Merchandise Inventory on the balance sheet at December 31,2018 if the perpetual inventory system and the first-in,first-out inventory costing method are used?

A company that uses the perpetual inventory system sold goods for $2,400 to a customer on account.The company had purchased the inventory for $800.Which of the following journal entries correctly records the cost of goods sold?

Which of the following inventory costing methods uses the cost of the oldest purchases to compute the cost of goods sold?

A company that uses the perpetual inventory system sold goods to a customer on account for $2,300.The cost of the goods sold was $1,150.Which of the following journal entries correctly records this transaction?

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $7,000 and paid $800 for the freight-in.The company sold the whole lot to a supermarket chain for $15,000 on account.Which of the following entries correctly records the sale?

First Street Merchandisers has total cost of goods sold of $54,500,total beginning inventory of $18,500,and total ending inventory of $22,100.Cost of goods available for sale is $73,000