26 Oulo Corporation has tswo products in its ending inventory, each asconumted f

Question

26 Oulo Corporation has tswo products in its ending inventory, each asconumted for as the lower ofeost or market A profit margin of 30%on selling price is considered Dinh l for each product. Specifie data with respeet to eash produet follews Historical cost Replacement cost Estimated sost to dispose 310 S 18 14 Estimated selling price In pricing its ending inventory using the lower arest-or-market what valua rounded to the nearest dollar, should Oslo use for products #1 andE2-respectively A) S13 and S15. B) $10 and 516. C) $11 and 514. D) $13 and 516. 20 27. Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 480 units that cost 565 euch. During the month, the company made two purchases: 720 units at $68 each and 360 units at $70 each. Chess Top also sold 1.200 units during the month. Using the FIFO method, what is the amount of cost of goods sold for the month? A) $80,160 B) $81,048 C) $78,000. D) $81,960. Which of the following is a characteristie of a peretual inventory sysiem? A) 28. Cost of goods sold is determined as the amount of purchases less the change in inventory B) Inventory purchases are debited to a Purchases account. C) Inventory records are not kept for every item. ) Cost of goods sold is recorded with each sale. The total amount of purchases and the total amount of sales remain relatively unchanged from the comparable previous period. If the sales, reduced to the cost basis, are deducted from the sum of the opening inventory plus purchases, the result is the amount of inventory on hand. 29. Which of the following is not a basic assumption of the gross profit method? A) B) C) The beginning inventory plus the purchases equal total goods to be accounted for D) Goods not sold must be on hand.

Explanation / Answer

26) answer is C) $11 AND &14 PRODUCT 1)RC=11 , CEILING: NRV=SP-DISPOSAL COST =20-3=17 FLOOR= NRV-PROFIT MARGIN =17-(20*.3)=11 LCM= 11 PRODUCT2) RC=14 , NRV=33-7=26 FLOOR=NRV-PM =26-(33*03)= 16.10 . LCM=14 27)ANSWER IS A)$80160 AMOUNT OF COGS= (480*65)+(720*68) 28) D)COGS IS RECORDED WITH EACH SALE 29) A) The total amount of purchases and the total amount of sales remain relatively unchanged from the comparable previous period.

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