Q&A Hero

Q: Blossom Inc. has an unadjusted debit balance of $3,500 in its Allowance for Doubtful Accounts. The company has experienced bad debt losses of 2% of credit sales in prior periods. Blossom reported net credit sales of $1,500,000 for the current period. The required journal entry to record Bad Debt Expense should include a debit to: A) Allowance for Doubtful Accounts for $30,000. B) Allowance for Doubtful Accounts for $33,500. C) Bad Debt Expense for $33,500. D) Bad Debt Expense for $30,000.

Q: Harney Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $2,700 and the company had $140,000 of net credit sales during the period. Harney has experienced bad debt losses of 4% of credit sales in prior periods. After making the adjusting entry for estimated bad debts, what is the ending balance in the Allowance for Doubtful Accounts account? A) $8,300 B) $5,400 C) $2,900 D) $5,600

Q: Countryside Corporation provides $6,000 worth of lawn care on account during the month. Experience suggests that about 2% of net credit sales will not be collected. To record the potential bad debts, Countryside Corporation would debit: A) Accounts Receivable and credit Allowance for Doubtful Accounts for $120. B) Allowance for Doubtful Accounts and credit Bad Debt Expense for $120. C) Bad Debt Expense and credit Allowance for Doubtful Accounts for $120. D) Bad Debt Expense and credit Accounts Receivable for $120.

Q: Wrangler Inc. uses the percentage of credit sales method to estimate Bad Debt Expense. At the end of the year, the companys unadjusted trial balance includes the following: Accounts Receivable $349,000 Allowance for Doubtful Accounts (credit balance) 200 Net Credit Sales 900,000 Wrangler has experienced bad debt losses of 0.5% of credit sales in prior periods. What is the Bad Debt Expense to be recorded for the year? A) $4,500 B) $4,300 C) $4,700 D) $45,000

Q: Plasma Inc. uses the percentage of credit sales method to estimate Bad Debt Expense. The company reported net credit sales of $500,000 during the year. Plasma has experienced bad debt losses of 2% of credit sales in prior periods. At the beginning of the year, Plasma has a credit balance in its Allowance for Doubtful Accounts of $4,000. No write-offs or recoveries were recorded during the year. What amount of Bad Debt Expense should Plasma recognize for the year? A) $4,000 B) $6,000 C) $10,000 D) $14,000

Q: Jensen Company uses the percentage of credit sales method for calculating Bad Debt Expense. The company reported $216,000 in total sales during the year; $178,000 of which were on credit. Jensen has experienced bad debt losses of 6% of credit sales in prior periods. What is the estimated amount of Bad Debt Expense for the year? A) $12,960 B) $10,680 C) $38,000 D) $11,000

Q: Wasco Company has experienced bad debt losses of 5% of credit sales in prior periods. At the end of the year, the balance of Accounts Receivable is $100,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $500. Net credit sales during the year were $150,000. Using the percentage of credit sales method, what is the estimated Bad Debt Expense for the year? A) $5,000 B) $7,000 C) $7,500 D) $8,000

Q: Cary Inc. reported net credit sales of $300,000 for the current year. The unadjusted credit balance in its Allowance for Doubtful Accounts is $500. The company has experienced bad debt losses of 1% of credit sales in prior periods. Using the percentage of credit sales method, what amount should the company record as an estimate of Bad Debt Expense? A) $2,500 B) $3,000 C) $2,980 D) $3,200

Q: Labrador Inc. has the following information available for the current year: Net Sales $750,000 Bad Debt Expense 60,000 Accounts Receivable, Beginning of Year 120,000 Accounts Receivable, End of Year 55,000 Allowance For Doubtful Accounts, Beginning of Year 42,000 Allowance For Doubtful Accounts, End of Year 62,000 What was the amount of write-offs during the year? A) $62,000 B) $0 C) $55,000 D) $40,000

Q: Daley Company uses the allowance method. At December 31, 2015, the companys balance sheet reports Accounts Receivable, Net in the amount of $17,000. On January 2, 2016, Daley writes off a $1,500 customer account balance when it becomes clear that the customer will never pay. What is the amount of Accounts Receivable, Net after the write-off? A) $17,000 B) $1,500 C) $18,500 D) $15,500

Q: Lakeview Inc. uses the allowance method. During the year, Lakeview concludes that specific customers will never pay their account balances, which total $6,844. The entry to record the write-off of these accounts receivable would debit: A) Accounts Receivable and credit Allowance for Doubtful Accounts for $6,844. B) Accounts Receivable and credit Bad Debt Expense for $6,844. C) Bad Debt Expense and credit Accounts Receivable for $6,844. D) Allowance for Doubtful Accounts and credit Accounts Receivable for $6,844.

Q: Kata Company uses the allowance method. On May 1, Kata wrote off a $22,000 customer account balance when it becomes clear that the particular customer will never pay. The journal entry to record the write-off on May 1 would include which of the following? A) Debit to Bad Debt Expense and credit to Allowance for Doubtful Accounts B) Debit to Accounts Receivable and credit to Allowance for Doubtful Accounts C) Debit to Allowance for Doubtful Accounts and credit to Bad Debt Expense D) Debit to Allowance for Doubtful Accounts and credit to Accounts Receivable

Q: Countryside Corporation uses the allowance method. Countryside writes off a $350 customer account balance when it becomes clear that the customer will never pay. Countryside Corporation should debit: A) Bad Debt Expense and credit Accounts Receivable for $350. B) Allowance for Doubtful Accounts and credit Accounts Receivable for $350. C) Bad Debt Expense and credit Cash for $350. D) Accounts Receivable and credit Bad Debt Expense for $350.

Q: When the allowance method is used, the entry to record the write-off of specific uncollectible accounts would decrease: A) the Allowance for Doubtful Accounts account. B) Net Income. C) Accounts Receivable, Net. D) Bad Debt Expense.

Q: Langley Company uses the allowance method. During January 2016, Langley writes off a $500 customer account balance when it becomes clear that the customer will never pay. The entry to record the write-off will: A) decrease total assets by $500. B) decrease net income for 2016 by $500. C) decrease net accounts receivable by $500. D) not increase the expenses for 2016.

Q: For billing and collection purposes, a company will internally keep a separate accounts receivable account for each customer called a: A) customer record. B) subsidiary account. C) subsidiary ledger. D) debit memorandum. Answer: B Feedback: For billing and collection purposes, a company will keep a separate accounts receivable account (called a subsidiary account) for each customer. 41 . Assume the Hart Company uses the allowance method. When the company writes off a customers account balance that has no chance of collection: A) total assets will decrease. B) total liabilities will increase. C) expenses and revenues will both increase. D) total assets will decrease and expenses will increase. Answer: D Feedback: When the allowance method is used and a customer account is written off, a decrease is recorded in Accounts Receivable, which is offset by a decrease in the contra-account, Allowance for Doubtful Accounts. The decrease in Accounts Receivable decreases total assets, while the decrease in the Allowance for Doubtful Accounts increases total assets. As a result, total assets do not change. A write-off does not affect liabilities, revenues, or expenses.

Q: On the balance sheet, the Allowance for Doubtful Accounts: A) is included in current liabilities. B) increases the reported Accounts Receivable, Net. C) is reported under the heading Other Assets. D) is subtracted from Accounts Receivable.

Q: Accounts Receivable, Net (or Net Accounts Receivable) equals Accounts Receivable (gross) minus: A) Cost of Goods Sold. B) Bad Debt Expense. C) Allowance for Doubtful Accounts. D) Current Liabilities.

Q: Assume the Murtha Company reported the following adjusted account balances at year-end. 2016 2015 Accounts Receivable $1,560,200 $1,210,920 Allowance for Doubtful Accounts (79,000) (64,600) Accounts Receivable, Net $1,481,200 $1,146,320 Assume the company recorded no write-offs or recoveries during 2016. What was the amount of Bad Debt Expense reported in 2016? A) $79,000 B) $64,600 C) $28,800 D) $14,400

Q: The adjusting entry used to record the estimated bad debts in the period credit sales occur decreases: A) both net income and net accounts receivable. B) net income and increases liabilities. C) assets and increases liabilities. D) both selling expenses and net income.

Q: The adjusting entry to record the estimated bad debts in the period credit sales occur would normally include a debit to: A) Accounts Receivable and a credit to Allowance for Doubtful Accounts. B) Bad Debt Expense and a credit to Allowance for Doubtful Accounts. C) Allowance for Doubtful Accounts and a credit to Accounts Receivable. D) Bad Debt Expense and a credit to Accounts Receivable.

Q: The adjusting entry to record the estimated bad debts in the period credit sales occur includes a debit to an: A) asset account and a credit to a liability account. B) expense account and a credit to an asset account. C) expense account and a credit to a revenue account. D) expense account and a credit to a contra-asset account.

Q: The Allowance for Doubtful Accounts account is a contra-account that offsets: A) Bad Debt Expense. B) Cash. C) Net Income. D) Accounts Receivable.

Q: Countryside Corporation provides $6,000 worth of lawn care on account during the month. Experience suggests that about 2% of net credit sales will not be collected. In conformity with the expense recognition principle, the company should: A) record an estimate of Bad Debt Expense in the same period as the lawn care is provided. B) not report the sales revenue until it collects payment. C) increase the value of its liabilities with an adjustment. D) wait until the accounts are determined to be uncollectible before making an entry to record the related Bad Debt Expense.

Q: Accounts receivable: A) arise from the purchase of goods or services on credit B) are amounts owed to a business by its customers. C) will be collected within the discount period or when due. D) are reported on the income statement.

Q: IBM signs an agreement to lend one of its customers $200,000 to be repaid in one year at 5% interest. IBM would record this loan as: A) Notes Payable. B) Accounts Receivable. C) Notes Receivable. D) Unearned Revenue.

Q: Countryside Corporation is owed $11,890 from a customer for landscaping. The account is overdue and the customer is having difficulty paying. Countryside might ask the customer to sign a note for the unpaid amount to: A) decrease its net income for tax reporting purposes. B) strengthen Countryside Corporation's legal right to be repaid with interest. C) reduce its tax liability. D) eliminate any doubts of collection of the amount due.

Q: If a company did not extend credit to customers: A) gross revenue would increase. B) costs would increase but so would sales revenue. C) costs would decrease but so would sales revenue. D) gross profit would increase.

Q: Which of the following statements about extending credit is not correct? A) It is common for companies to sell on account to other companies. B) Some companies extend credit to individual consumers. C) Bad debts arise from credit sales to individual consumers, but not from credit sales to other companies. D) When credit is available, customers often buy more products and services.

Q: The potential disadvantages of extending credit include all of the following except: A) increased bad debt costs. B) customers buying too much. C) the need to hire employees to undertake collection efforts. D) higher wage costs in the accounting department.

Q: Companies are concerned about the cost of extending credit for all the following reasons except the: A) time delay in receiving payment. B) expense of the extra goods that must be produced or purchased for resale. C) risk of nonpayment. D) administrative costs associated with extending credit.

Q: Extending credit to customers will introduce all of the following additional costs except: A) increased wage costs will be incurred to hire people to evaluate whether each customer is creditworthy, track how much each customer owes, and follow up to collect the receivable from each customer. B) bad debt costs will result when amounts cannot be collected from customers. C) delayed receipt of cash may result in requiring the company to take out short-term loans and incur interest costs. D) decreased gross profit from reduced sales.

Q: Which of the following statements about the tradeoffs of extending credit is not correct? A) Extending credit to at least some customers is necessary in a competitive market to avoid losing sales to competitors. B) Even if a company were to collect in full from customers, there would be other additional costs introduced by extending credit to customers. C) Even though additional costs are incurred if credit is extended, a company expects that the additional revenue will be more than sufficient to offset the additional costs. D) Even if there are no bad debts from credit sales, the delayed receipt of cash will always increase additional costs beyond the increased revenue from the credit sales.

Q: The potential advantages of extending credit to customers include all of the following except higher: A) wage expenses. B) profits. C) customer satisfaction. D) revenues.

Q: Credit card companies charge a fee to the seller that accepts the credit cards. This fee is recorded by the seller as a non-operating expense on its income statement.

Q: When credit card sales occur, the seller may receive cash immediately, or within a few days, depending upon the specific credit card program being used.

Q: If a company factors its receivables, its receivables turnover ratio will be lower than it would have been if the receivables had not been factored.

Q: Choose the appropriate letter to match the term and the definition. There are more definitions than terms. TERM 1. ____ Days to Sell 2. ____ FIFO 3. ____ Inventory Turnover 4. ____ LIFO 5. ____ LIFO Conformity Rule 6. ____ Lower of Cost or Market Rule 7. ____ Specific Identification 8. ____ Weighted Average Cost DEFINITION A. A valuation rule that requires Inventory to be written down when its market value falls below its cost. B. Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold. C. Beginning Inventory + Purchases Ending Inventory D. Consists of products acquired in a finished condition, ready for sale without further processing. E. The expense that follows directly after Net Sales on a multiple step income statement. F. Goods a company is holding on behalf of the goods owner. G. Goods that are held for sale in the normal course of business or are used to produce other goods for sale. H. Goods that are in the process of being manufactured. I. Inventory costing method that identifies the cost of the specific item that was sold. J. The inventory that starts the manufacturing process. K. Inventory that was in process and now is completed and ready for sale. L. Inventory items being transported. M. A measure of the average number of days from the time inventory is bought to the time it is sold. N. How many times (on average) that inventory has been bought or sold. O. Requires that if LIFO is used on the income tax return, it also must be used in financial statement reporting. P. Beginning Inventory + Purchases Cost of Goods Sold Q. The difference between net sales and cost of goods sold. R. Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold. S. Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.

Q: Choose the appropriate letter to match the term and the definition. There are more definitions than terms. TERM 1. ____ Consignment Inventory 2. ____ Cost of Goods Sold 3. ____ Cost of Goods Sold Equation 4. ____ Ending Inventory Equation 5. ____ Finished Goods Inventory 6. ____ Goods in Transit 7. ____ Gross Profit 8. ____ Inventory 9. ____ Merchandise Inventory 10. ____ Raw Materials Inventory 11. ____ Work in Process Inventory DEFINITION A. A valuation rule that requires Inventory to be written down when its market value falls below its cost. B. Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold. C. Beginning Inventory + Purchases Ending Inventory D. Consists of products acquired in a finished condition, ready for sale without further processing. E. The expense that follows directly after Net Sales on a multiple step income statement. F. Goods a company is holding on behalf of the goods owner. G. Goods that are held for sale in the normal course of business or are used to produce other goods for sale. H. Goods that are in the process of being manufactured. I. Inventory costing method that identifies the cost of the specific item that was sold. J. The inventory that starts the manufacturing process. K. Inventory that was in process and now is completed and ready for sale. L. Inventory items being transported. M. A measure of the average number of days from the time inventory is bought to the time it is sold. N. How many times (on average) that inventory has been bought or sold. O. Requires that if LIFO is used on the income tax return, it also must be used in financial statement reporting. P. Beginning Inventory + Purchases Cost of Goods Sold Q. The difference between net sales and cost of goods sold. R. Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold. S. Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.

Q: Darlington Inc. reported the following amounts on their financial statements for Year 1, Year 2 and Year 3: Ended December 31 Reported Amounts Year 1 Year 2 Year 3 Inventory $155,000 $165,000 $110,000 Cost of goods sold 75,000 87,000 77,000 Net income 22,000 25,000 21,000 It was discovered early in Year 4 that the ending inventory at the end of Year 1 was overstated by $6,000 and the ending inventory at the end of Year 2 was understated by $2,500. The ending inventory at the end of Year 3 was correctly reported. Required: Ignoring income taxes, determine the correct amounts of cost of goods sold and net income for each of the three years and total assets at the end of each the three years and complete the table below. Show your work. Ended December 31 Reported Amounts Year 1 Year 2 Year 3 Inventory $110,000 Cost of goods sold Net income Supporting calculations:

Q: Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income. Inventory Error Cost of Goods Sold Net Income Understatement of beginning inventory Understatement of ending inventory Overstatement of beginning inventory Overstatement of ending inventory

Q: The following company purchases and sells collectors' coin sets. The company uses the LIFO inventory costing method. In the first two sections of the table below, each coin set is identified by its letter and its cost. The third section indicates when coin sets were sold. Beginning Inventory Purchases during Year Sales during Year A $200 B January 5 $202 January 15 1 coin set C February 5 $203 May 15 1 coin set D March 5 $208 June 15 1 coin set E April 5 $213 September 15 1 coin set F July 5 $216 October 15 1 coin set G August 5 $216 H November 5 $223 Required: For each inventory costing method given below, fill in the blanks to indicate the letter of the coin set which will be used to calculate either cost of goods sold or the cost of ending inventory. Part a. Periodic Inventory System Cost of Goods Sold = _____ + _____ + _____ + _____ + _____ Ending Inventory = _____ + _____ + _____ Part b. Perpetual Inventory System Cost of Goods Sold = _____ + _____ + _____ + _____ + _____ Ending Inventory = _____ + _____ + _____

Q: Fill in the blanks below with the words higher and lower to indicate which inventory costing method causes the value to be higher and which causes it to be lower. Assume that the cost of inventory is decreasing. FIFO LIFO Cost of Goods Sold Ending Inventory Net Income Inventory Turnover Days to Sell

Q: During its first year of operations, Energy Inc. is experiencing increasing inventory costs. Required: Part a. Explain how each of the inventory costing methods will affect the amount reported for inventory at the end of the year. (Ignore the specific identification method.) Part b. Explain how each of those three inventory costing methods will affect the amount reported for cost of goods sold. Part c. Identify the inventory costing methods that will produce the highest and lowest inventory turnover ratios.

Q: A company reported the following data: Year 1 Year 2 Year 3 Cost of goods sold $347,600 $379,650 $443,900 Average inventory 85,000 91,050 98,350 Required: Part a. Calculate the company's inventory turnover for each of the three years. (Round your answers to two decimal points.) Part b. Calculate the days to sell for each of the three years. (Round your answers to one decimal point.) Part c. Comment on the company's inventory turnover ratio by describing what it measures, how the changes over the past three years can be interpreted, and what may have caused those changes. Part d. Comment on the company's days to sell by describing what it measures and how the changes over the past three years can be interpreted.

Q: Bluebell Company sells blue jeans. Last year, bell-bottom jeans were fashionable; this year, boot cut jeans are in style. The company has 375 units of bell-bottom jeans with a cost of $17 per unit and a market value of $15 per unit. The inventory also includes 1,000 units of boot cut jeans with a cost of $16 per unit and a market value of $19 per unit. Required: Part a Explain whether this situation requires an adjustment to the accounting records. Part b Prepare the journal entry, if any, that is required to adjust the Inventory account.

Q: Lucia Inc. uses a perpetual inventory system. The company has a beginning inventory of 400 units at $70 per unit. The company purchases 1,000 units in August at $72 each and 600 units in November at $75 each. The company sells 1,000 units in September and 900 units in December. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. (Round the per unit cost to two decimal places and then round your answer to the nearest whole dollar.) Part a. FIFO Part b. LIFO Part c. Weighted Average

Q: Consider the following information for Maynor Company, which uses a perpetual inventory system: Transaction Units Unit Cost Total Cost January 1 Beginning Inventory 10 $60 $ 600 March 28 Purchase 20 66 1,320 August 22 Purchase 20 70 1,400 October 14 Purchase 25 76 1,900 Goods Available for Sale 75 $5,220 The company sold 25 units on May 1 and 20 units on October 28. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. Part a. FIFO Part b. LIFO Part c. Weighted Average

Q: The college campus bookstore uses a periodic inventory system. The bookstore purchases 400 copies of a textbook at $70 each in June, 1,000 copies in August at $72 each, and 600 copies in December at $75 each. The bookstore sold 1,900 copies of the textbook during the year. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. Part a. FIFO Part b. LIFO Part c. Weighted Average

Q: Consider the following information for Maynor Company, which uses a periodic inventory system: Transaction Units Unit Cost Total Cost January 1 Beginning Inventory 10 $60 $ 600 March 28 Purchase 20 66 1,320 August 22 Purchase 20 70 1,400 October 14 Purchase 25 76 1,900 Goods Available for Sale 75 $5,220 The company sold 25 units on May 1 and 20 units on October 28. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. (Round the per unit cost to two decimal places and then round your answer to the nearest whole dollar.) Part a. FIFO Part b. LIFO Part c. Weighted Average

Q: Assume that the cost of inventory is decreasing. Required: Fill in the blanks below with the words higher and lower to indicate which inventory costing method causes the value to be higher and which causes it to be lower. Value FIFO LIFO Cost of Goods Sold Ending Inventory Net Income

Q: Friedman Company made the following purchases during the year: January 10 15 units at $360 per unit March 15 25 units at $390 per unit April 25 10 units at $420 per unit July 30 20 units at $450 per unit October 10 15 units at $480 per unit On December 31, there were 28 units in ending inventory. These 28 units consisted of 1 from the January 10 purchase, 2 from the March 15 purchase, 5 from the April 25 purchase, 15 from the July 30 purchase, and 5 from the October 10 purchase. Using specific identification, calculate the cost of the ending inventory.

Q: Torrington Inc. updates its inventory records perpetually. The companys records showed a beginning inventory of $6,200, cost of goods sold of $81,600, and ending inventory of $12,000. Required: Determine the amount of inventory that was purchased during the year.

Q: Haltom Company updates its inventory perpetually. The company reported a beginning inventory of $7,500. During the year, the company recorded inventory purchases of $38,500 and cost of goods sold of $25,000. Required: Determine the amount of ending inventory.

Q: Greenies Inc. updates its inventory periodically. The companys cost of goods sold was $24,700 and purchases were $12,000 during the year. The companys ending inventory count was $3,500. Required: Determine the amount of beginning inventory.

Q: Pinkney Company updates its inventory periodically. The companys beginning inventory was $5,000 and purchases were $10,600 during the year. The companys ending inventory count was $7,000. Required: Determine the amount of cost of goods sold for the year.

Q: Axle Inc. purchases inventory from Nutria Company and then Axle sells it to Chang Company. Inventory is in transit on the last day of the year. Indicate who owns the inventory by placing an X in the proper column for each item that is described. Description Owned by Nutria Owned by Axle Owned by Chang Terms of purchase were FOB destination Not applicable Terms of purchase were FOB shipping point Not applicable Terms of sale were FOB destination Not applicable Terms of sale were FOB shipping point Not applicable

Q: A one-time error in the application of the lower of cost or market (LCM) rule in the current period distorts financial results for the current accounting period: A) only. B) and the period before. C) and the period after. D) and all periods after.

Q: An understatement of the ending inventory balance will cause: A) Cost of goods sold to be overstated and net income to be understated. B) Cost of goods sold to be overstated and net income to be overstated. C) Cost of goods sold to be understated and net income to be overstated. D) Cost of goods sold to be overstated and net income to be correct.

Q: Ending inventory is incorrectly calculated in the current year. It is accurately calculated at the end of the next year. The error in the ending inventory in the current year: A) affects only income statement accounts. B) affects only balance sheet accounts. C) can be ignored since it will self-correct. D) is a self-correcting error.

Q: An understatement of the beginning inventory balance causes cost of goods sold to be: A) understated and net income to be understated. B) understated and net income to be overstated. C) overstated and net income to be understated. D) overstated and net income to be correct.

Q: A $15,000 overstatement of the current years ending inventory was discovered after the financial statements for the year were prepared. How would that inventory error impact the current years financial statements? A) Current assets were overstated and net income was understated. B) Current assets were understated and net income was understated. C) Current assets were overstated and net income was overstated. D) Current assets were understated and net income was overstated.

Q: A company uses a weighted-average perpetual inventory system. The following transactions took place during the month of November: November 1 5 units were purchased at $6.00 per unit November 12 10 units were purchased at $7.50 per unit November 14 7 units were sold for $14.00 per unit November 24 12 units were purchased at $10.00 per unit What is the per-unit value of ending inventory on November 30 if this company uses a weighted-average perpetual inventory system? (Round each per unit cost to two decimal points.) A) $6.00 B) $7.00 C) $8.80 D) $13.00

Q: A company uses a weighted-average perpetual inventory system. The following transactions took place during the month of August: August 2 10 units were purchased at $12 per unit August 18 15 units were purchased at $15 per unit August 29 20 units were sold August 31 14 units were purchased at $16 per unit What is the per-unit value of ending inventory on August 31? (Round each per unit cost to two decimal points.) A) $12.00 B) $13.80 C) $15.42 D) $16.00 E) $17.74

Q: A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, the company purchased 10 units at $22 each. On November 5, the company sold 8 units for $55 each. On November 6, the company purchased 6 units at $25 each. The company uses a perpetual inventory system. Using the weighted average method, what is the value of the ending inventory on November 30? (Round each per unit cost to two decimal places and then round your answer to the nearest whole dollar.) A. $304 B. $404 C. $299 D. $280

Q: Which of the following statements about the calculations used for the weighted average inventory costing method is correct? A) Under the weighted average cost method, if the goods in inventory were purchased at three different prices, the three different prices would be added and then divided by three to find the weighted average cost per unit. B) When the weighted average inventory costing method is used, ending inventory and cost of goods sold are calculated using different costs per unit. C) There is no difference in the calculations under the weighted average method whether a perpetual or periodic inventory system is used. D) The weighted-average method will produce an inventory cost which is between the results of FIFO and LIFO inventory costing methods.

Q: Amiable Inc. uses a perpetual inventory system. The following transactions took place during the month of August: August 2 25 units were purchased at $12 per unit August 5 10 units were purchased at $13 per unit August 15 12 units were sold at $25 per unit August 18 15 units were purchased at $14 per unit If Amiable uses the LIFO method, what is the ending inventory at August 31? A. $496.00 B. $486.00 C. $492.57 D. $300.00 E. $510.00

Q: Use the information above to answer the following question. If Charter Company uses the LIFO method, what is the cost of goods sold for the year? A) $38 B) $34 C) $44 D) $72

Q: Use the information above to answer the following question. If Charter Company uses the LIFO method, what is the cost of its ending inventory? A) $38 B) $34 C) $44 D) $72

Q: Pearl Company has a perpetual inventory system. The company uses the FIFO method to assign costs to inventory and cost of goods sold. Consider the following information: Date Description Units Cost per unit April 1 Beginning inventory 1,000 $5 April 2 Purchase 750 $4 April 5 Sales 1,250 What amounts would be reported as cost of goods sold and ending inventory for April? A) Cost of goods sold $6,250; Ending inventory $1,750 B) Cost of goods sold $7,550; Ending inventory $2,250 C) Cost of goods sold $5,500; Ending inventory $2,500 D) Cost of goods sold $6,000; Ending inventory $2,000

Q: The Farley Corporation starts the year with a beginning inventory of 3,000 units at $5 per unit. The company purchases 5,000 units at $4 each in February and 2,000 units at $6 each in March. Farley sells 1,500 units during this quarter. Farley has a perpetual inventory system and uses the FIFO inventory costing method. What is the cost of goods sold for the quarter? A) $6,000 B) $9,340 C) $7,500 D) $9,000

Q: The most commonly used inventory costing method in the U.S. is: A) FIFO. B) specific identification. C) LIFO. D) weighted average.

Q: Which of the following statements is correct? A) Valuing inventory under LIFO may produce different results depending on whether a perpetual or periodic inventory system is used. B) Valuing inventory under the weighted average cost method always produces the same results using either a perpetual or periodic inventory system. C) Valuing inventory under FIFO may produce different results depending on whether a perpetual or periodic inventory system is used. D) Using the specific identification method will produce different results depending on whether perpetual or periodic inventory system is used.

Q: Because LIFO uses older costs for inventory, in times of rising units costs: A) LIFO results in a higher book value of inventory and lower inventory turnover ratio than FIFO. B) LIFO results in a lower book value of inventory and lower inventory turnover ratio than FIFO. C) LIFO results in a higher book value of inventory and higher inventory turnover ratio than FIFO. D) LIFO results in a lower book value of inventory and higher inventory turnover ratio than FIFO.

Q: Which one of the following statements about inventory is not correct? A) An increase in inventory levels is always a sign of inefficiency in inventory management. B) The measurement of inventory affects both the balance sheet and the income statement within an accounting period. C) The ending inventory of one accounting period becomes the beginning inventory of the next accounting period. D) The cost of inventory can vary over time and may be affected by technological innovation.

Q: Which of the following statements about inventory measures is not correct? A) If the inventory turnover ratio increases, the days to sell measure decreases. B) The days to sell measure can help managers make ordering decisions for inventory. C) A higher inventory turnover ratio indicates that inventory is moving more quickly from purchase to sale. D) It is rare for a company with a lower gross profit percentage to have a faster inventory turnover.

Q: Which of the following statements about inventory turnover analysis is not correct? A) In making comparisons of financial statements, it is desirable to compare data calculated using the same inventory costing methods. B) The inventory turnover ratio and days to sell measure will be affected by the cost flow assumptions used, which causes problems for financial statements users. C) Inventory turnover also can vary significantly between companies within the same industry. D) The inventory turnover and days to sell ratios are consistent among companies in different industries.

Q: Which of the following would cause the greatest increase in a companys inventory turnover ratio? A) Keeping the same amount of inventory on hand while unit sales are increasing B) Increasing the amount of inventory on hand while unit sales are increasing C) Keeping the same amount of inventory on hand while unit sales are decreasing D) Decreasing the amount of inventory on hand while unit sales are increasing

Q: Which of the following companies would be least concerned about a low inventory turnover ratio? A) A fish market selling fresh fish B) A hardware company selling drywall screws C) A dairy company selling butter and milk D) A semiconductor company selling microchips

Q: For a manufacturer, inventory turnover refers to how many times: A) during the period the company replaces the raw materials inventory. B) the company purchases and sells its inventory of finished goods. C) the company produces its goods and delivers the inventory to customers. D) the company orders raw materials.