Question 1

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $7,000 and paid $750 for the freight-in.The company sold the whole lot to a supermarket chain for $13,000 on account.The company uses the specific-identification method of inventory costing.Which of the following entries correctly records the cost of goods sold?

Accepted Answer

The cost of goods sold is calculated by taking the cost of the goods sold from the warehouse and deducting it from the cost of goods available for sale. In this case, the cost of goods available for sale is $7,750 ($7,000 for the 500 pallets of soap plus $750 for freight-in). Since the specific-identification method is used, the cost of goods sold is equal to the cost of the 500 pallets sold on account to the supermarket chain. Therefore, the cost of goods sold is $7,000 for the 500 pallets sold. The entry to record the cost of goods sold is a debit to Cost of Goods Sold for $7,000 and a credit to Inventory for $7,000. Choice A is the only option that reflects this entry.

Question 2

A company purchased 100 units for $30 each on January 31.It purchased 150 units for $25 on February 28.It sold 150 units for $50 each from March 1 through December 31.If the company uses the weighted-average inventory costing method,calculate the amount of Cost of Goods Sold on the income statement for the year ending December 31.(Assume the company uses the perpetual inventory system.)

Accepted Answer

The answer of A company purchased 100 units for $30...

Question 3

Under the weighted-average method for inventory costing,the cost per unit is determined by ________.

Accepted Answer

The weighted-average method calculates the cost per unit by dividing the total cost of goods available for sale by the total number of units available for sale.

Question 4

Pluto Inc.purchased inventory on account for $6,500.Provide the journal entry to record the purchase of inventory on account.(Assume a perpetual inventory system.)

Accepted Answer

The answer of Pluto Inc.purchased inventory on account for $6,500.Provide...

Question 5

Rodriguez Inc.had the following balances and transactions during 2015:  What would the Ending Merchandise Inventory amount be as reported on the balance sheet at December 31,2015 if the perpetual first-in,first-out costing method is used?

Accepted Answer

Since perpetual first-in,first-out costing method is used, we need to assume that the ending inventory is made up of the most recent purchases. Therefore, the value of the ending inventory would be the cost of the most recent purchases, which is $8,200.

Question 6

Clark Sales sold 450 units of product to a customer on account.The company uses the perpetual inventory system.The selling price was $28 per unit,and the cost,according to the company's inventory records,was $12 per unit.Provide the journal entry to record the sales revenue.

Accepted Answer

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

Question 7

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 $12,000 on account.Which of the following entries correctly records the sale?

Accepted Answer

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

Question 8

Metro Computer Inc.had the following balances and transactions during 2014:  What would the company's ending merchandise inventory amount be on December 31,2014 if the perpetual last-in,first-out costing method is used?

Accepted Answer

Using perpetual last-in, first-out (LIFO) costing method, the ending inventory would consist of the most recent purchases. Looking at the transaction records for 2014, the most recent purchase would be the December 17th purchase of 150 units at a cost of $52 per unit. Therefore, the ending merchandise inventory amount on December 31, 2014 would be:
150 units x $52 per unit = $7,800
However, 50 units were sold on December 29th at a price of $100 per unit, which means that the cost of those units needs to be subtracted from the ending inventory amount. The cost of those 50 units would be:
50 units x $52 per unit = $2,600
Subtracting this amount from the initial ending inventory of $10,350 yields a final ending inventory amount of:
$10,350 - $2,600 = $7,750. Therefore, the correct answer is (C).

Question 9

A company purchased 100 units for $20 each on January 31.It purchased 100 units for $30 on February 28.It sold 150 units for $45 each from March 1 through December 31.If the company uses the last-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

Under the LIFO method, the last items purchased are the first to be sold. Therefore, 100 units from February at $30 each and 50 units from January at $20 each are sold. The cost of goods sold is (100 units x $30) + (50 units x $20) = $3,000 + $1,000 = $4,000.

Question 10

Rodriguez Inc.had the following balances and transactions during 2014,from January 1 to December 31:  What would the Ending Merchandise Inventory amount be as reported on the balance sheet at December 31,2014 if the perpetual weighted-average costing method is used? (Round your intermediate calculations to two decimal places.)

Accepted Answer

Using the perpetual weighted-average costing method, we need to calculate the weighted-average cost per unit for the merchandise inventory. 
Total cost of goods available for sale = Beginning Inventory + Purchases = $4,500 + $21,000 = $25,500
Total units available for sale = Beginning Inventory units + Purchases units = 150 + 750 = 900 units
Weighted-average cost per unit = Total cost of goods available for sale / Total units available for sale = $25,500 / 900 = $28.33 per unit

To calculate the ending inventory value, we need to multiply the number of units in ending inventory by the weighted-average cost per unit.
Ending inventory units = 240 units (300 units - 60 units sold)
Ending Inventory value = Ending inventory units × Weighted-average cost per unit = 240 units × $28.33 per unit = $8,160

Therefore, the Ending Merchandise Inventory amount as reported on the balance sheet at December 31, 2014, using the perpetual weighted-average costing method is $8,160. Option A is the best choice.

Question 11

Harris Inc.had the following balances and transactions during 2014:  What would the cost of goods sold be as reported on the income statement for the year ending December 31,2014 if the perpetual,last-in,first-out costing method is used? (Round your answer to two decimal places.)

Accepted Answer

The answer of Harris Inc.had the following balances and transactions...

Question 12

Henderson Sales purchased $6,000 of inventory on account.Provide the journal entry.(Assume a perpetual inventory system.)

Accepted Answer

The answer of Henderson Sales purchased $6,000 of inventory on...

Question 13

Pluto Inc.purchased 500 units of inventory at $25 per unit by payment of cash.Provide the journal entry to record the purchase of inventory.(Assume a perpetual inventory system.)

Accepted Answer

The answer of Pluto Inc.purchased 500 units of inventory at...

Question 14

A company that uses the perpetual inventory system sold goods for $1,000 to a customer on account.The company had purchased the inventory for $400.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

Henderson 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 Henderson Sales sold 400 units of product...

Question 16

Harris Inc.had the following balances and transactions during 2015:  What would the Cost of Goods Sold be as reported on the income statement for the year ending December 31,2015 if the perpetual first-in,first-out costing method is used?

Accepted Answer

The answer of Harris Inc.had the following balances and transactions...

Question 17

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

Accepted Answer

Weighted-average unit cost is calculated by dividing the total cost of goods available for sale by the total number of units available for sale. Therefore, the correct formula is:

Weighted-average unit cost = Cost of goods available for sale ÷ Number of units available

Question 18

A company that uses the perpetual inventory system sold goods to a customer for cash for $3,000.The cost of the goods sold was $1,000.Which of the following journal entries correctly records this transaction?

Accepted Answer

The correct journal entry for the transaction is to debit cash for $3,000 and credit inventory for $1,000 and revenue for $2,000. 
Option B correctly records this transaction. 
Option A only records the cash portion of the transaction. 
Option C debits inventory for the full cost of the goods sold and does not credit revenue. 
Option D records an unrelated transaction.

Question 19

Lewis Inc.had the following balances and transactions during 2014:  What would the Cost of Goods Sold be as reported on the income statement for the year ending December 31,2014 if the perpetual weighted-average costing method is used? (Round your intermediate calculations to two decimal places.)

Accepted Answer

Under the perpetual weighted-average costing method, the cost of goods sold is calculated based on the average cost of all units sold during the period. 
Calculation: 
Total cost of inventory available for sale = $8,000 + $2,400 = $10,400 
Total number of units available for sale = 200 + 80 = 280 
Weighted-average cost per unit = Total cost of inventory available for sale / Total number of units available for sale 
= $10,400 / 280 = $37.14 
Cost of goods sold = 160 units sold x $37.14 per unit = $5,942.40 
Therefore, the Cost of Goods Sold as reported on the income statement for the year ending December 31, 2014 if the perpetual weighted-average costing method is used would be $16,240.

Question 20

A company that uses the perpetual inventory system sold goods to a customer on account for $2,000.The cost of the goods sold was $1,000.Which of the following journal entries correctly records this transaction?

Accepted Answer

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

Quiz 6: Merchandise Inventory

Under the weighted-average method for inventory costing,the cost per unit is determined by ________.

Pluto Inc.purchased inventory on account for $6,500.Provide the journal entry to record the purchase of inventory on account.(Assume a perpetual inventory system.)

Rodriguez Inc.had the following balances and transactions during 2015: What would the Ending Merchandise Inventory amount be as reported on the balance sheet at December 31,2015 if the perpetual first-in,first-out costing method is used?

Clark Sales sold 450 units of product to a customer on account.The company uses the perpetual inventory system.The selling price was $28 per unit,and the cost,according to the company's inventory records,was $12 per unit.Provide the journal entry to record the sales revenue.

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 $12,000 on account.Which of the following entries correctly records the sale?

Metro Computer Inc.had the following balances and transactions during 2014: What would the company's ending merchandise inventory amount be on December 31,2014 if the perpetual last-in,first-out costing method is used?

Harris Inc.had the following balances and transactions during 2014: What would the cost of goods sold be as reported on the income statement for the year ending December 31,2014 if the perpetual,last-in,first-out costing method is used? (Round your answer to two decimal places.)

Henderson Sales purchased $6,000 of inventory on account.Provide the journal entry.(Assume a perpetual inventory system.)

Pluto Inc.purchased 500 units of inventory at $25 per unit by payment of cash.Provide the journal entry to record the purchase of inventory.(Assume a perpetual inventory system.)

A company that uses the perpetual inventory system sold goods for $1,000 to a customer on account.The company had purchased the inventory for $400.Which of the following journal entries correctly records the cost of goods sold?

Henderson 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.)

Harris Inc.had the following balances and transactions during 2015: What would the Cost of Goods Sold be as reported on the income statement for the year ending December 31,2015 if the perpetual first-in,first-out costing method is used?

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

A company that uses the perpetual inventory system sold goods to a customer for cash for $3,000.The cost of the goods sold was $1,000.Which of the following journal entries correctly records this transaction?

Lewis Inc.had the following balances and transactions during 2014: What would the Cost of Goods Sold be as reported on the income statement for the year ending December 31,2014 if the perpetual weighted-average costing method is used? (Round your intermediate calculations to two decimal places.)

A company that uses the perpetual inventory system sold goods to a customer on account for $2,000.The cost of the goods sold was $1,000.Which of the following journal entries correctly records this transaction?