Question

Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

	Quantity			Unit Cost			Total Cost
Beginning inventory (Jan. 1)		20		$	15		$	300
Purchase (Jan. 11)		16		$	21			336
Purchase (Jan. 20)		27		$	23			621
Total		63					$	1,257

On January 14, Beech Soda, Inc. sold 29 units of this product. The other 34 units remained in inventory at January 31.

Assuming that Beech Soda uses the FIFO cost flow assumption, the cost of goods sold to be recorded at January 14 is:

a	$482.
b	$422.
c	$690.
d	$1,194.

Question 8 (2 points)

Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

	Quantity			Unit Cost			Total Cost
Beginning inventory (Jan. 1)		22		$	20		$	440
Purchase (Jan. 11)		21		$	26			546
Purchase (Jan. 20)		32		$	28			896
Total		75					$	1,882

Assuming that Beech Soda uses the LIFO cost flow assumption, the cost of goods sold to be recorded at January 14 is:

On January 14, Beech Soda, Inc. sold 34 units of this product. The other 41 units remained in inventory at January 31.

a	$1,882.
b	$752.
c	$1,062.
d	$806.

Question 9 (2 points)

Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

	Quantity			Unit Cost			Total Cost
Beginning inventory (Jan. 1)		17		$	8		$	136
Purchase (Jan. 11)		9		$	14			126
Purchase (Jan. 20)		20		$	16			320
Total		46					$	582

On January 14, Beech Soda, Inc. sold 22 units of this product. The other 24 units remained in inventory at January 31.

Assuming that Beech Soda uses the FIFO cost flow assumption, the 24 units of this product in inventory at January 31 have a total cost of:

a	$182.
b	$376.
c	$352.
d	$360.

Question 10 (2 points)

At the end of last year, Games-2-Use had merchandise costing $290,000 in inventory. During January of the current year, the company purchased merchandise costing $236,000, and sold merchandise that it had purchased at a total cost of $188,000. Games-2-Use uses a perpetual inventory system.

The total amount debited to the Inventory account during January was:

a	$0.
b	$188,000.
c	$236,000.
d	$290,000.

Question 11 (2 points)

At the end of last year, Games-2-Use had merchandise costing $140,000 in inventory. During January of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. Games-2-Use uses a perpetual inventory system.

The balance in the Inventory account at January 31 was:

a	$84,000.
b	$242,000.
c	$158,000.
d	$140,000.

Question 12 (2 points)

At the end of last year, Games-2-Use had merchandise costing $170,000 in inventory. During January of the current year, the company purchased merchandise costing $111,000, and sold merchandise that it had purchased at a total cost of $96,000. Games-2-Use uses a perpetual inventory system.

The amount of goods transferred from the Inventory account to the Cost of Goods Sold account during January was:

a	$0.
b	$96,000.
c	$111,000.
d	$74,000.

Question 13 (2 points)

Castle TV, Inc. purchased 1,400 monitors on January 5 at a per-unit cost of $126, and another 1,400 units on January 31 at a per-unit cost of $246. In the period from February 1 through year-end, the company sold 2,500 units of this product. At year-end, 300 units remained in inventory.

Assume that Castle TV, Inc. uses the LIFO flow assumption. The cost of the 300 units in the year-end inventory is:

a	$37,800.
b	$55,800.
c	$111,600.
d	$73,800.

Question 14 (2 points)

Venus Wholesale Co. started carrying a new product in December. Purchases and sales of this product during the month were:

Dec	20		Purchased 150 units at $85 per unit.
Dec	26		Sold 135 units.
Dec	28		Purchased 150 units at $93 per unit.

Assuming the LIFO flow assumption is in use, the perpetual inventory records will indicate an ending inventory of this product of:

a	$14,145.
b	$15,225.
c	$15,425.
d	$12,750.

Question 15 (2 points)

On Saturday, June 30, BD Pool Supplies sold merchandise to E. Luang on account. The sales price was $5,700, and the cost of goods sold was $4,830. The sales revenue was recorded immediately, but the entry recording the cost of goods sold was dated Monday, July 2. As a result, net income for June was:

a	Overstated by $5,700.
b	Overstated by $4,830.
c	Overstated by $870.
d	Overstated by $0.

Question 16 (2 points)

Venus Wholesale Co. started carrying a new product in December. Purchases and sales of this product during the month were:

Dec	20		Purchased 300 units at $100 per unit.
Dec	26		Sold 285 units.
Dec	28		Purchased 300 units at $112 per unit.

Assuming the LIFO flow assumption is in use, the perpetual inventory records will indicate an ending inventory of this product of:

a	$31,680.
b	$35,100.
c	$35,300.
d	$30,000.

Question 17 (2 points)

The specific identification method is acceptable only when the actual cost of individual units of merchandise can be determined from the accounting records.

True

False

Question 18 (2 points)

An advantage of the average-cost method of accounting for inventory is that the inventory is valued in the balance sheet at current replacement costs.

True

False

Question 19 (2 points)

An advantage to the LIFO method of accounting for inventory is that it values the cost of goods sold at current replacement costs.

True

False

Answer 1