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In: Accounting

35. Never results in either the highest or lowest possible net income. a. FIFO b. LIFO...

35. Never results in either the highest or lowest possible net income.

a. FIFO
b. LIFO

c. average cost

Use the following information to answer the following questions.

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Date	Product Z	Units	Cost
May 3	Purchase	5	$30
May 10	Sale	3

May 17	Purchase	10	$34
May 20	Sale	6
May 23	Sale	3
May 30	Purchase	10	$40

58.

Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.

a. $494

b. $502

c. $422

d. $520

59. Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.
a. $78
b. $90

c. $102

d. $180

60. Assuming that the company uses the perpetual inventory system, determine the ending inventory for the month of May using the LIFO inventory cost method.
a. $422
b. $502

c. $520

d. $494

The following lots of a particular commodity were available for sale during the year:

Beginning inventory, First purchase, Second purchase, Third purchase

10 units at $55, 25 units at $65, 30 units at $68, 15 units at $70

The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.

62. What is the amount of the inventory at the end of the year using the average cost method?

a. $1,645

b. $1,525

c. $1,730

d. $3,620

67. For the year ended December 31, 2011 Depot Max’s cost of merchandise sold was $54,350. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max’s number of days sales in inventory is closest to

a. 43
b. 50

c. 8

d. 47

Expert Solution

Q35 C) Average Cost

Q58 B) $502 [(10 units * $40) + (3 units * $34)]

Q59 A) $78 (3 units * ($60 - $34))

Q60 A) $422 [(5 units * $30) + (8 units * $34)]

Q62 D) $3,620

	Average Cost

Particulars	Units	Per Unit	Total Cost	Average Cost per unit (Total Cost/Units)
Opening	10	55.00	550
Purchases 1	25	65.00	1,625
Average	35		2,175	62.14

Purchases 2	30	68.00	2,040
Average	65		4,215	64.85

Purchases 3	15	70.00	1,050
Average	80		5,265	65.81

Sales	25	65.81	1,645

Closing	55		3,620	65.81

Q67 C) 8 days

= Cost of goods sold/Average inventory

= 54,350 / 6895

= 7.89 days or 8 days approx.

Average inventory = (beginning inventory + closing inventory)/2

= (6540 +7250)/2

= 6895

ekkarill92 answered 2 years ago

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