1. Checkers uses the periodic inventory system. For the current month, the begin
ID: 2525215 • Letter: 1
Question
1. Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7,200 units that cost $12 each. During the month, the company made two purchases: 3,000 units at $13 each and 12,000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month?
a. $167,055.
b. $173,700.
c. $161,850.
d. $167,700.
2. The following information was available from the inventory records of Rich Company for January:
Units Unit Cost Total Cost
Balance at January 1 9,000 $9.77 $87,930
Purchases:
January 6 6,000 10.30 61,800
January 26 8,100 10.71 86,751
Sales:
January 7 (7,500)
January 31 (11,100)
Balance at January 31 4,500
Assuming that Rich does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar?
a. $47,270.
b. $46,067.
c. $46,170.
d. $46,620.
3. Black Corporation uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2017 was $280,000. The balance in the same account at the end of 2018 is $420,000. Black’s Cost of Goods Sold account has a balance of $2,100,000 from sales transactions recorded during the year. What amount should Black report as Cost of Goods Sold in the 2018 income statement?
a. $1,960,000.
b. $2,100,000.
c. $2,240,000.
d. $2,520,000.
4. RF Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the
year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end
prices was $430,080, and the price index was 112.
What is RF Company’s gross profit?
a. $1,248,000.
b. $1,294,080.
c. $1,330,380.
d. $2,605,920.
5. Hay Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the
year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end
prices was $379,500, and the price index was 110.
What is Hay Company’s ending inventory?
a. $330,000.
b. $345,000.
c. $349,500.
d. $379,500.
6. Opera Corp. uses dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows:
Year ended Inventory at Price
December 31. End-of-year Prices Index
2016 $ 650,000 1.00
2017 1,260,000 1.05
2018 1,350,250 1.10
What is the 2018 inventory balance using dollar-value LIFO?
a. $1,350,250.
b. $1,285,000.
c. $1,227,500.
d. $1,257,750.
7. Niles Co. has the following data related to an item of inventory:
Inventory, March 1 400 units @ $2.10
Purchase, March 7 1,400units @ $2.20
Purchase, March 16 280 units @ $2.25
Inventory, March 31 520 units
The value assigned to cost of goods sold if Niles uses FIFO is
a. $1,160.
b. $1,104.
c. $3,448.
d. $3,392.
8. Transactions for the month of June were:
Purchases Sales
June 1 (balance) 3,200@ $3.20 June 2 2,400 @ $5.50
3 8,800 @ 3.10 6 6,400 @ 5.50
7 4,800 @ 3.30 9 4,000 @ 5.50
15 7,200 @ 3.40 10 1,600 @ 6.00
22 2,000 @ 3.50 18 5,600 @ 6.00
25 800 @ 6.00
Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is
a. $16,440.
b. $16,640.
c. $17,160.
d. $17,880.
Explanation / Answer
?
1) Solution: $167,055
Explanation:
[(7,200 * $12) + (3,000 * $13) + (12,000 * $13.50] / (7,200 + 3,000 + 12,000)
=$12.95
Now, $12.95 * 12,900 = $167,055
?
2) Solution: $46,067
Working:
($87,930 + $61,800 + $86,751) / (9,000 + 6,000 + 8,100) = $10.237/unit
$10.237 * 4,500 = $46.067
?
3) Solution: $2,240,000
Working: 2,100,000 + 420,000 - 280,000 = 2,240,000
?
4) Solution: $1,330,080
Explanation:
Opening inventory
300,000
Purchases
1,800,000
Ending inventory
-430,080
1,669,920
Sales
3,000,000
COGS
1,669,920
1,330,080
As per norms we can solve first for sub-parts
Opening inventory
300,000
Purchases
1,800,000
Ending inventory
-430,080
1,669,920
Sales
3,000,000
COGS
1,669,920
1,330,080
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