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Exam 7: Inventories and Cost of Goods Sold

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Question 31

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Alphabet Company buys different letters for resale.It buys A thru J on January 1 at $4 per letter,and sells C on January 15.On February 1,it buys K and L at $6 per letter and sells A and K on February 9.It then buys M thru O on March 1 at $7 per letter and sells F,L,M,N,and O on March 19.If the company uses the LIFO method on a perpetual basis,what is the cost of goods sold for the three months ended March 31 (rounded to the nearest dollar) ?

A) $32
B) $41
C) $45
D) $56

E) B) and D)
F) A) and D)

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Question 32

Multiple Choice

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Use the information above to answer the following question.Acme sells 300 units during the quarter.If Acme uses the LIFO method,what is its cost of goods sold for the quarter?

A) $1,600
B) $1,400
C) $1,500
D) $1,800

E) All of the above
F) A) and D)

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Question 33

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A merchandise company's beginning inventory plus merchandise purchases equals:

Which of the following is the equation for cost of goods sold?

An increasing inventory turnover ratio indicates:

In a period of falling prices,the inventory costing method that assigns a value to inventory that approximates current cost is

Use the information above to answer the following question.Which of the following statements is true?

Use the information above to answer the following question.If the company uses the specific identification method,what is the cost of its ending inventory?

Which of the following is true about terms 2/10,n/30?

In a period of rising prices,the inventory costing method that will tend to smooth out erratic changes in costs is

The cost assigned to cost of goods sold and to inventory under the FIFO method will be the same whether the perpetual or the periodic inventory system is used.

The 2014 records of Thompson Company showed beginning inventory,$6,000;cost of goods sold,$14,000;and ending inventory,$8,000.The cost of purchases was:

On July 1,B.Darin Company sold merchandise costing $4,500 to S.Dee Company for $6,000,terms 2/10,n/30.Both companies use the perpetual inventory system.S.Dee Company pays the invoice on July 8 and takes the appropriate discount.What is the journal entry that S.Dee Company will make on July 8?

If a company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit,its weighted average unit cost for this inventory would be:

Goods on consignment are goods shipped by the owner to another company that holds the goods and sells them for the owner.

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold (COGS)and ending inventory balances for the period? A.Option A B.Option B C.Option C D.Option D

Meanmocha Hardware has a periodic inventory system and uses the weighted average method.The company began the month of November with 150 large brass switch plates on hand at a cost of $4.00 each.These switch plates sell for $7.00 each.The following schedule sets forth the purchases of switch plates during November: If Meanmocha sells 570 switch plates for $7.00 each during November,the company's gross profit for November is closest to:

An error in the ending inventory in one year will cause a misstatement of retained earnings in the following year.

The inventory turnover ratio is calculated as:

The primary goals of inventory management do not include: