In: Accounting
Mad Max’s Motorcycle Sales has the following activity for the month of January:
25 Motorcycles were sold at $20,000 each
Units Cost/Bike Value Assume Beginning Inventory 1/1 10 12,000 120,000 Purchases 1/3 5 13,000 65,000 Purchases 1/15 10 14,000 140,000 Purchases 1/25 10 15,000 150,000 Subtotal- Avail for Sale 35 475,000 Sales (25) End Inventory 10 |
(Use the information to answer questions 36-40)
36. What is the Cost of Merchandise Sold of the 25 motorcycles under FIFO?
a. $255,000
b. $185,000
c. $325,000
d. $355,000
37. What is the Cost of Merchandise Sold under LIFO?
a. $185,000
b. $355,000
c. $325,000
d. $120,000
38. What is the ending inventory under FIFO?
a. $0
b. $120,000
c. $150,000
d. $185,000
39. What is the ending inventory under LIFO?
a. $0
b. $120,000
c. $150,000
d. $185,000
40. What is the Cost of Goods Sold under the Average Cost Method?
a. $475,000
b. $500,000
c. $275,000
d. $339,286
36.
FIFO Method | Units | Rate | Amount |
Sale from beginning inventory | 10 | $ 12,000 | $ 120,000 |
Sale from 1/3 purchase | 5 | $ 13,000 | $ 65,000 |
Sale from 1/15 purchase | 10 | $ 14,000 | $ 140,000 |
Cost of goods sold | 25 | $ 325,000 |
Answer is C.
37.
LIFO Method | Units | Rate | Amount |
Sale from 1/25 purchase | 10 | $ 15,000 | $ 150,000 |
Sale from 1/15 purchase | 10 | $ 14,000 | $ 140,000 |
Sale from 1/3 purchase | 5 | $ 13,000 | $ 65,000 |
Cost of goods sold | 25 | $ 355,000 |
Answer is C.
38.
FIFO Method | Units | Rate | Amount |
Balance from 1/25 purchase | 10 | $ 15,000 | $ 150,000 |
Ending inventory | 10 | $ 150,000 |
Answer is C.
39.
LIFO Method | Units | Rate | Amount |
Balance from beginning inventory | 10 | $ 12,000 | $ 120,000 |
Ending inventory | 10 | $ 120,000 |
Answer is B.
40.
Weighted average cost per unit = value of goods available for sale / Total units available |
Weighted average cost per unit = $475,000/35 |
Weighted average cost per unit = $13,571.429 |
Cost of goods sold = 25*$13,571.429 |
Cost of goods sold = $339,286 |
Answer is D.
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