44. Partridge Bookstore had 500 units on hand at January 1, costing $9 each. Pur

Question

44. Partridge Bookstore had 500 units on hand at January 1, costing $9 each. Purchases and sales during the month of January were as follows:

Date Purchases Sales
Jan. 14    375 @ $14
17    250 @ $10
25    250 @ $11
29    260 @ $16

Partridge does not maintain perpetual inventory records. According to a physical count, 365 units were on hand at January 31.

The cost of the inventory at January 31, under the LIFO method is:
a. $3,285.
b. $3,525.
c. $4,015.
d. $3,900.

46.   Green Company's records indicate the following information for the year:
Merchandise inventory, 1/1 $   400,000
Purchases 2,500,000
Net sales 4,000,000
On December 31, a physical inventory determined that ending inventory of $450,000 was in the warehouse. Green's gross profit on sales has remained constant at 40%.
Green suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory?
a. $40,000
b. $50,000
c. $75,000
d. $100,000

42.       Inventory is

a. reported under the classification of Property, Plant, and Equipment on the balance sheet.
b. reported as a current asset on the balance sheet.
c. often reported as a miscellaneous expense on the income statement.
d. generally valued at the price for which the goods can be sold.

2. Generally accepted accounting principles are
a. theories that are based on physical laws of the universe.
b. income tax regulations of the Internal Revenue Service.
c. standards that indicate how to report economic events.
d. principles that have been proven correct by academic researchers.

3. The historical cost principle requires that when assets are acquired, they be recorded at
a. appraisal value.
b. book value.
c. cost.
d. market price.

4. The basic accounting equation may be expressed as
a. Assets = Equities.
b. Assets = Liabilities + Stockholders' Equity.
b. Assets – Liabilities = Stockholders' Equity.
d. All of these answers are correct.

5. Revenues would not result from
a. sale of merchandise.
b. issuance of common stock.
c. performance of services.
d. rental of property.

6. If total assets equal $500,000 and total stockholders' equity equal $350,000, then total liabilities must equal
a. $485,000.
b. $150,000.
c. $205,000.
d. There is not enough information given to determine this.

7. The accounting equation for Brown Enterprises is as follows:
Assets  Liabilities Stockholders' Equity
$150,000 = $40,000 + $110,000
If Quattro purchases computer on account for $10,000, the accounting equation will change to
   Assets Liabilties Stockholders' Equity
a. $120,000 = $60,000   + $60,000
b. $145,000 = $60,000   + $85,000
c. $160,000 = $50,000   + $110,000
d. $145,000 = $85,000   + $60,000

8. Collection of a $3,000 Accounts Receivable
a. increases an asset $3,000; decreases an asset $3,000.
b. decreases a liability $3,000; increases stockholders' equity $3,000.
c. increases an asset $3,000; decreases a liability $3,000.
d. decreases an asset $3,000; decreases a liability $3,000.

9. Green’s Computer Repair Shop started the year with total assets of $400,000 and total liabilities of $125,000. During the year, the business recorded $350,000 in computer repair revenues, $225,000 in expenses, and Green Co. paid dividends of $50,000. Stockholders' equity at the end of the year was
a. $150,000.
b. $200,000.
c. $250,000.
d. $350,000.

Explanation / Answer

44)cost of inventory at LIFO method As it is LIFO,last came items are sold first. cost of inventory on 31st january=365*9=$ 3285 $9 is the cost of opening inventory which will be used for valuing. 46) sales    4,000,000.00 Add:Closing stock        450,000.00 Less:purchase    2,500,000.00 Less:opening stock        400,000.00 Less:Gross Profit(Sales*40%)    1,600,000.00 inventory taken by employee -       50,000.00 Option B is correct. That is $ 50,000 42)Inventory is reported as a current asset on the balancesheet. 2)Generally accepted accounting principles are standards that indicate how to report economic events. 3)The historical cost principle requires that when assets are acquired, they be recorded at COST 4) The basic accounting equation may be expressed as Assets = Liabilities + Stockholders' Equity Option D 5)Revenues would not result from issuance of common stock. 6)Total assets        500,000.00 stockholders equity        350,000.00 total assets=stockholders equity+total liabilities 500000=350000+total liabilities total liabilities=$ 150000 Option B is correct 7)ACCOUNTING EQUATION TOTAL ASSETS LIABILITIES + STOCKHOLDERS EQUITY                                             150,000.00          40,000.00                            110,000.00 purchased computer on account for $ 10000                                               10,000.00          10,000.00                                             -   then accounting equation is                                               160,000.00          50,000.00                            110,000.00 option C is correct 8)Increase in asset $ 3000 & decrease in asset of $ 3000 Option A is correct 9)opening Stockholders Equity =total assets-liabiities 400000-125000        275,000.00 Add:Revenues        350,000.00 Less:Expenses -     225,000.00 Less:Dividend -       50,000.00 Stockholders equity at the end        350,000.00 Option D is correct

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