Question

1. Grays Company has inventory of 16 units at a cost of $11 each on August 1. On August 3, it purchased 26 units at $10 each. 18 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 18 units that were sold? Multiple Choice $202. $196. $200. $84. $288.

2. The chief executive officer earns $20,400 per month. As of May 31, her gross pay was $102,000. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. What is the amount of FICA- Social Security withheld from this employee for the month of June?

$1,023.00

• $295.80

• $7,347.00

• $239.25

• $1,264.80

3. A company had net sales of $30,300 and ending accounts receivable of $3,900 for the current period. Its days' sales uncollected equals: (Use 365 days a year.) 58.18 days. 62.28 days. 38.98 days. 46.98 days. 7.77 days.

4. A company had the following purchases and sales during its first year of operations:

	Purchases	Sales
January:	29 units at $215	20 units
February:	39 units at $220	18 units
May:	34 units at $225	22 units
September:	31 units at $230	21 units
November:	29 units at $235	37 units

On December 31, there were 44 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Multiple Choice

• $14,338.

• $14,936.

• $15,296.

• $22,105.

• $9,715.

5.

During the first week of January, an employee works 45 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $20 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $92 in federal income taxes withheld. What is the amount of this employee’s net pay for the first week of January?

• $877.33

• $950.00

• $164.68

• $785.33

• $1,114.68

Answer 1

1) Ans:- Option B) $ 196

Explanation:

Opening Stock, 16 units @ $ 11 each = $ 176

Purchase of 26 Units @ $ 10 each = $ 260

Sold 18 Units.

As Per FIFO Method, in the above sold units include opening stock of 16 units and purchase of 2 units.

Cost of goods sold = 16 *11 =$ 176 + 2* 10 =20 = 176+20 =196

2) Ans:- Option A) $ 1023

Explanation

Earnings taxable for FICA- Social Security in June	16500	=118500-102000
X FICA- Social Security tax rate	6.20%
FICA- Social Security withheld for June	1,023

3) Ans:- Option D) 46.98 Days

Explanation

Net sales $ 30,300

Account receivable $3, 900

day's sales uncollected equal to =365/(net sales /account receivable)

=365/(30,300/3900)

=365/7.77 = 46.97555

=46.98 days

4) Ans :- Option E) $9715

Explanation

Calculation of Ending inventory value as per LIFO (Perpetual method) :

Month	Units lefts in inventory	Total value ($)
Jan	9 units	9 units *215 = 1,935
Feb	21 units	21 units * 220 = 4,620
May	12 units	12 units *225 = 2,700
Sept	2 units	2 units * 230 = 460
Inventory Value		9715

Therefore required value of inventory = $9,715 (option E)

5) Ans :- Option D) 785.32

Explanation

Required Journal entry
Salary expense(40*20)+(5*20*150%)	950
Social security taxes payable(950*6.2%)		58.90
Medicare taxes payable(9.50*1.45%)		13.77
Federal Withholding taxes payable		92
Salaries Payable		785.32
Employee’s net pay for the first week of January =	785.32

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