Biscuit Bakery had the following activity in its inventory account during August 20X3. $\begin{array}{lllcc} \text { Date } & \text { Activity } & \text { Units } & \begin{array}{c} \text { Cost per } \\ \text { Unit Cost } \end{array} & \text { Total } \\ \hline \text { August 1 } & \text { Beginning inventory } & 100 & \$ 3.00 & \$ 300 \\ \text { August 3 } & \text { Purchase } & 40 & 3.10 & 124 \\ \text { August 7 } & \text { Sale } & 50 & & \\ \text { August 12 } & \text { Purchase } & 50 & 3.20 & 160 \\ \text { August 16 } & \text { Sale } & 70 & & \\ \text { August 23 } & \text { Sale } & 40 & & \\ \text { August 30 } & \text { Purchase } & 60 & 3.30 & 198 \end{array}$ What is the ending inventory balance at August 31,20X3,for Biscuit Bakery if the company uses perpetual FIFO as its inventory valuation method?

A) $198.00 B) $270.00 C) $294.00 D) $297.50 E) $358.00 A) $198.00 B) $270.00 C) $294.00 D) $297.50 E) $358.00

Queen Mattresses,Inc.had the following transactions occur during May 20X3.Assume there is no beginning inventory. $\begin{array}{ll} \text { May } 2 & \text { Inventory was purchased on account for } \$ 5,000 \text {, terms } 2 / 10, n / 30 . \\ \text { May } 3 & \text { Inventory costing } \$ 1,000 \text { was returned. } \\ \text { May } 9 & \text { Paid for the inventory. } \\ \text { May 15 } & \text { Inventory costing } \$ 2,200 \text { was sold on account for } \$ 3,800 \text {, terms } 3 / 10, n / 45 \text {, } \\ \text { May } 31 & \text { Closing entries are prepared for the month-end financial statements. } \end{array}$ If Queen Mattresses,Inc.were using a perpetual inventory system,what is the journal entry for May 15?

A) $\begin{array}{lll} \text { Accounts Receivable } & 3,800 & \\ \quad \text { Sales } & & 3,800 \\ \end{array}$ B) $\begin{array}{lccc} \text { Accounts Receivable } & 3,800& \\ \quad \text { Sales } & & 3,800 \\ \text { Cost of Goods Sold } & 2,134 & \\ \text { Cash Discounts on Sales } &66 & \\ \quad \text { Inventory } & & 2,200\\ \end{array}$ C) $\begin{array}{lccc} \text { Accounts Receivable } & 3,800\\ \quad \text { Sales } & & 3,800 \\ \text { Cost of Goods Sold } &2,200 \\ \quad \text { Inventory } & & 2,200\\ \end{array}$ D) $\begin{array}{lccc} \text { Accounts Receivable } & 3,686 \\ \text { Cash Discount on Sales } & 114 \\ \quad \text { Sales } & &3,800 \\ \end{array}$ E) $\begin{array}{lccc} \text { Accounts Receivable } & 3,686 \\ \text { Cash Discount on Sales } & 114 & \\ \quad \text { Sales } & & 3,800 \\ \text { Cost of Goods Sold } & 2,200 & \\ \quad \text { Inventory } && 2,200 \end{array}$ A) $\begin{array}{lll} \text { Accounts Receivable } & 3,800 & \\ \quad \text { Sales } & & 3,800 \\ \end{array}$ B) $\begin{array}{lccc} \text { Accounts Receivable } & 3,800& \\ \quad \text { Sales } & & 3,800 \\ \text { Cost of Goods Sold } & 2,134 & \\ \text { Cash Discounts on Sales } &66 & \\ \quad \text { Inventory } & & 2,200\\ \end{array}$ C) $\begin{array}{lccc} \text { Accounts Receivable } & 3,800\\ \quad \text { Sales } & & 3,800 \\ \text { Cost of Goods Sold } &2,200 \\ \quad \text { Inventory } & & 2,200\\ \end{array}$ D) $\begin{array}{lccc} \text { Accounts Receivable } & 3,686 \\ \text { Cash Discount on Sales } & 114 \\ \quad \text { Sales } & &3,800 \\ \end{array}$ E) $\begin{array}{lccc} \text { Accounts Receivable } & 3,686 \\ \text { Cash Discount on Sales } & 114 & \\ \quad \text { Sales } & & 3,800 \\ \text { Cost of Goods Sold } & 2,200 & \\ \quad \text { Inventory } && 2,200 \end{array}$

Exam 7: Inventories and Cost of Goods Sold

Panel Install has 200 units of inventory that have a replacement cost of $4.90 per unit.The net realizable value of the inventory also declined.Originally this inventory cost $5.50 per unit from an order of 400.What entry is required?

(Multiple Choice)

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Question 41

LIFO liquidation refers to the relatively higher profits generated under LIFO when reductions in inventory levels occur because older,lower inventory costs are used in calculating cost of goods sold.

(True/False)

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Question 42

An attribute associated with inventory valuation methods is that the lower the cost of goods sold the higher the ending inventory.

(True/False)

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Question 43

The replacement costs have increased from $5.60 per unit to $6.20 per unit from the time 200 units of inventory were purchased.The year-end audit found 120 units remaining in stock.What entry is required?

(Multiple Choice)

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Question 44

Which of the following inventory methods physically links the particular items sold with the actual cost of goods sold for the items sold?

(Multiple Choice)

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Question 45

Which of the following statements is correct?

(Multiple Choice)

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Question 46

The LIFO costing method can result in misleading inventory costs on the balance sheet because the oldest costs are left in ending inventory.

(True/False)

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Question 47

Color Images,Inc.started March 1,20X3 with an inventory balance of 20 pieces of lumber originally purchased for $2.00 per piece.During the month,the company purchased 100 pieces of lumber for $2.00 per piece for cash and sold 50 pieces of lumber on account to one contractor for $5.00 per piece.At the end of March,20X3,Color Images,Inc.conducted a physical inventory of its lumber and accounted for 66 pieces of lumber.The company uses a perpetual inventory system.Make the necessary journal entries for the month of March,20X3.

(Essay)

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Question 48

Biscuit Bakery had the following activity in its inventory account during August 20X3. Date Activity Units Cost per Unit Cost Total August 1 Beginning inventory 100 \ 3.00 \ 300 August 3 Purchase 40 3.10 124 August 7 Sale 50 August 12 Purchase 50 3.20 160 August 16 Sale 70 August 23 Sale 40 August 30 Purchase 60 3.30 198 What is the ending inventory balance at August 31,20X3,for Biscuit Bakery if the company uses perpetual FIFO as its inventory valuation method?

(Multiple Choice)

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Question 49

Arko,Inc.,manufactures tables.During the month of March,20X9,Arko purchased 100 table tops of wood costing $3 per piece,400 table legs of wood costing $1 per leg,100 bottles of glue costing $2.50 per bottle,and 800 nails costing $.20 per nail.All raw materials were put into production during March,20X9,and production wages related to the production of tables amounted to $300.At the end of March,20X9,ending work in process inventory had 20 table tops of wood,80 table legs of wood,20 bottles of glue,and 160 nails. Required: What will be the inventory balances for Arko,Inc.,on March,31,20X9? Assume that the beginning balances on March 1,20X9,in the Raw Materials Inventory account was $400,the Work in Process Inventory account was $200,and the Finished Goods Inventory was $0.

(Essay)

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Question 50

On March 1,20X3,Environmental Impacts acquired inventory on account.The cost of the inventory was $85,000.The terms of the purchase were 2/10,n/30.Upon inspection of the inventory on March 2,$4,800 worth of inventory was returned.Environmental Impacts paid for the inventory on March 8.The company uses a periodic inventory system.What journal entry will Environmental Impacts make on March 2,20X3?

(Multiple Choice)

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Question 51

The gross profit percentage is calculated as sales divided by gross profit.

(True/False)

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Question 52

With inflation,a LIFO liquidation will

(Multiple Choice)

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Question 53

If ending inventory is understated by $3,000 in 20X3,net income in 20X4 will be overstated.

(True/False)

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Question 54

Queen Mattresses,Inc.had the following transactions occur during May 20X3.Assume there is no beginning inventory. May 2 Inventory was purchased on account for \ 5,000 , terms 2/10,n/30. May 3 Inventory costing \ 1,000 was returned. May 9 Paid for the inventory. May 15 Inventory costing \ 2,200 was sold on account for \ 3,800 , terms 3/10,n/45 , May 31 Closing entries are prepared for the month-end financial statements. If Queen Mattresses,Inc.were using a perpetual inventory system,what is the journal entry for May 15?

(Multiple Choice)

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Question 55

The journal entry to purchase merchandise under a periodic inventory system includes a debit to

(Multiple Choice)

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Question 56

Assuming inflation,FIFO will result in a higher net income than LIFO.

(True/False)

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Question 57

FIFO will report the highest cost of goods sold on the income statement when prices are falling.

(True/False)

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Question 58

Using the LIFO method,the earliest purchases of inventory are assumed to be contained

(Multiple Choice)

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Question 59

Which of the following statements is FALSE?

(Multiple Choice)

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Question 60

Showing 41 - 60 of 120

Panel Install has 200 units of inventory that have a replacement cost of $4.90 per unit.The net realizable value of the inventory also declined.Originally this inventory cost $5.50 per unit from an order of 400.What entry is required?

LIFO liquidation refers to the relatively higher profits generated under LIFO when reductions in inventory levels occur because older,lower inventory costs are used in calculating cost of goods sold.

An attribute associated with inventory valuation methods is that the lower the cost of goods sold the higher the ending inventory.

The replacement costs have increased from $5.60 per unit to $6.20 per unit from the time 200 units of inventory were purchased.The year-end audit found 120 units remaining in stock.What entry is required?

Which of the following inventory methods physically links the particular items sold with the actual cost of goods sold for the items sold?

Which of the following statements is correct?

The LIFO costing method can result in misleading inventory costs on the balance sheet because the oldest costs are left in ending inventory.

The gross profit percentage is calculated as sales divided by gross profit.

With inflation,a LIFO liquidation will

If ending inventory is understated by $3,000 in 20X3,net income in 20X4 will be overstated.

The journal entry to purchase merchandise under a periodic inventory system includes a debit to

Assuming inflation,FIFO will result in a higher net income than LIFO.

FIFO will report the highest cost of goods sold on the income statement when prices are falling.

Using the LIFO method,the earliest purchases of inventory are assumed to be contained

Which of the following statements is FALSE?

Accounting: the Language of Business

Measuring Income to Assess Performance

Recording Transactions

Accrual Accounting and Financial Statements

Statement of Cash Flows

Accounting for Sales

Long-Lived Assets

Liabilities and Interest

Stockholders Equity

Intercorporate Investments and Consolidations

Financial Statement Analysis

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