Question 1

A company that uses the perpetual inventory system sold goods to a customer on account for $2,100.The cost of the goods sold was $1,050.Which of the following journal entries correctly records this transaction?

Accepted Answer

The correct entry records the sale by debiting Accounts Receivable and crediting Sales Revenue for the sale amount, and debiting Cost of Goods Sold and crediting Merchandise Inventory for the cost of the goods.

Question 2

Under the last-in,first-out (LIFO)method,the cost of goods sold is based on the oldest purchases.

Accepted Answer

Under the last-in, first-out (LIFO) method, the cost of goods sold is based on the newest purchases, not the oldest. The older purchases are left in inventory, resulting in a higher cost of goods sold and lower ending inventory.

Question 3

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 entries to record the sale.

Accepted Answer

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

Question 4

A company purchased 400 units for $30 each on January 31.It purchased 95 units for $40 each on February 28.It sold 150 units for $55 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

11ea86d6_821e_eea0_92b6_83f175561d42_TB2804_00 Number of units sold = 150 units of which 95 units were purchased on Feb.28 at $40 per unit and 55 units were purchased on Jan.31 at $30 per unit.
 11ea86d6_821f_15b1_92b6_69632eb39bab_TB2804_00

Question 5

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 6

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

Accepted Answer

LIFO assumes that the most recent inventory purchases are sold first, meaning that the cost of goods sold is based on the costs of the most recent inventory purchases while the ending inventory is based on the costs of the oldest purchases. This can be helpful for businesses during times of inflation as it can reduce the tax burden.

Question 7

Martell,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 Martell,Inc.purchased inventory on account for $6,500.Provide the...

Question 8

Harris,Inc.had the following balances and transactions during 2017: $$\begin{array} { | l | l | } 
\hline \text { Beginning Merchandise Inventory as of January } 1,2017 & 160 \text { units at } \$ 70 \
\hline \text { March } 10 & \text { Sold } 80 \text { units } \
\hline \text { Iune } 10 & \text { Purchased } 175 \text { units at } \$ 77 \
\hline \text { October } 30 & \text { Sold } 175 \text { units } \
\hline
\end{array}$$ What would be reported for Cost of Goods Sold on the income statement for the year ending December 31,2017 if the perpetual inventory system and the last-in,first-out inventory costing method are used?

Accepted Answer

Under the LIFO method, the last items purchased are the first to be sold. Therefore, the cost of goods sold would include the 175 units purchased on June 10 at $77 each and 80 units from the beginning inventory at $70 each. Calculation: (175 units x $77) + (80 units x $70) = $13,475 + $5,600 = $19,075.

Question 9

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 10

A company that uses the perpetual inventory system sold goods to a customer for cash for $3,500.The cost of the goods sold was $600.Which of the following journal entries correctly records this transaction?

Accepted Answer

The correct journal entries for a sale in a perpetual inventory system include recording the cash received and sales revenue, as well as recording the cost of goods sold and reducing inventory.

Question 11

Metro Computer,Inc.had the following balances and transactions during 2017: $$\begin{array} { | l | l | } 
\hline \text { Beginning Merchandise Inventory as of January } 1,2017 & 240 \text { units at } \$ 71 \
\hline \text { March } 10 & \text { Sold } 80 \text { units } \
\hline \text { June } 10 & \text { Purchased } 720 \text { units at } \$ 76 \
\hline \text { October } 30 & \text { Sold } 125 \text { units } \
\hline
\end{array}$$ What would the company's ending merchandise inventory amount be on December 31,2017 if the perpetual inventory system and the last-in,first-out inventory costing method are used?

Accepted Answer

Under LIFO, the last items purchased are the first to be sold. After the sales, 755 units remain (240 + 720 - 80 - 125). The ending inventory consists of 240 units at $71 and 515 units at $76, totaling $56,580.

Question 12

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 $14,000 on account.Which of the following entries correctly records the sale?

Accepted Answer

The correct entries for the sale include debiting Accounts Receivable and crediting Sales Revenue for the sale amount of $14,000. Additionally, Cost of Goods Sold should be debited and Merchandise Inventory credited for the total cost of the goods sold, which includes the purchase cost and freight-in, totaling $7,800.

Question 13

Universal,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 Universal,Inc.purchased 500 units of inventory at $25...

Question 14

A company that uses the perpetual inventory system sold goods for $3,500 to a customer on account.The company had purchased the inventory for $900.Which of the following journal entries correctly records the cost of goods sold?

Accepted Answer

In a perpetual inventory system, the cost of goods sold is recorded by debiting the Cost of Goods Sold account and crediting the Merchandise Inventory account for the cost of the inventory sold, which is $900 in this case.

Question 15

South Meadows,Inc.sold 500 units of inventory at $25 per unit on account.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 South Meadows,Inc.sold 500 units of inventory at...

Question 16

When a company uses the last-in,first-out (LIFO)method,the cost of goods sold correlates to the most recently purchased goods,and the ending inventory correlates to the oldest goods in stock.

Accepted Answer

In LIFO method, the company assumes that the last units purchased are the first ones sold, which means the cost of goods sold will reflect the most recently purchased goods, and the ending inventory will correlate to the oldest goods in stock.

Question 17

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 18

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:
 $\begin{array}{|r|l|c|}
\hline \text { June } 7& \text { Purchase } & 25 \text { sofas @ } \$ 750 \text { each } \
\hline 14&\text { Sale } & 30 \text { sofas @ 1,150 each } \
\hline18& \text {  Purchase } & 50 \text { sofas @ } \$ 775 \text { each } \
\hline27& \text { Sale } & 35 \text { sofas } @ 1,200 \text { each } \
\hline
\end{array}$
 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 19

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:
 $\begin{array}{|r|l|c|}
\hline \text { June } 7& \text { Purchase } & 25 \text { sofas @ } \$ 750 \text { each } \
\hline 14&\text { Sale } & 30 \text { sofas @ 1,150 each } \
\hline18& \text {  Purchase } & 50 \text { sofas @ } \$ 775 \text { each } \
\hline27& \text { Sale } & 35 \text { sofas } @ 1,200 \text { each } \
\hline
\end{array}$
 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 20

A company purchased 400 units for $20 each on January 31.It purchased 200 units for $30 each on February 28.It sold a total of 270 units for $90 each from March 1 through December 31.If the company uses the last-in,first-out inventory costing method,calculate the amount of ending inventory on December 31.(Assume that the company uses a perpetual inventory system. )

Accepted Answer

The units in ending merchandise inventory are 330 units that were purchased on January 31 for $20 per unit.
Ending Merchandise Inventory = 330 units × $20 = $6,600

Quiz 6: Merchandise Inventory