Question

1. Transactions for the month of June were:

                                   Purchases                                                          Sales              

                          June 1             (balance) 3,200@ $3.20                    June 2      2,400 @ $5.50

                                  3                          8,800 @   3.10                            6      6,400 @   5.50

                                  7                          4,800 @   3.30                            9      4,000 @   5.50

                                15                          7,200 @   3.40                          10      1,600 @   6.00

                                22                          2,000 @   3.50                          18      5,600 @   6.00

                                                                                                              25         800 @   6.00

16.     Assuming that perpetual inventory records are kept in units only, the ending inventory on a LIFO basis is

a.   $16,440.

b.   $16,640.

c.   $17,160.

d.   $17,880.

2. Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7,200 units that cost $12 each. During the month, the company made two purchases: 3,000 units at $13 each and 12,000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the LIFO method, what is the ending inventory?

a.   $120,438.

b.   $111,600.

c.   $125,550.

d.   $113,700.

3. Web World began using dollar-value LIFO for costing its inventory last year. The base year layer consists of $600,000. Assuming the current inventory at end of year prices equals $828,000 and the index for the current year is 1.10, what is the ending inventory using dollar-value LIFO?

a.   $828,000.

b.   $768,000.

c.   $752,727.

d.   $910,800.

Answer 1

16. Answer is C $17160 ( calculation given below)

Date	Purchases	Sales	Balance
Jun-01	Beginning Inventory		3200 units x $3.20
Jun-02		2400 units	(3200-2400)= 800units x $3.20
Jun-03	8800 units x $3.10		800 units x $3.20 + 8800 units x$ 3.10
Jun-06		6400 units	800 units x $3.20 + (8800-6400)= 2400 unitsx $3.10
Jun-07	4800 units x $3.30		800 units x $3.20 + 2400 unitsx $3.10 +4800 units x $ 3.30
Jun-09		4000 units	800 units x $3.20 + 2400 unitsx $3.10 +(4800-4000)= 800 units x $ 3.30
Jun-10		1600 units	800 units x $3.20 + (2400-800)=1600 unitsx $3.10 +(800-800)=0 units x $ 3.30
Jun-15	7200 units x $3.40		800 units x $3.20 + 1600 unitsx $3.10 +7200 units x $3.40
Jun-18		5600 units	800 units x $3.20 + 1600 unitsx $3.10 +(7200-5600)= 1600 units x $3.40
Jun-22	2000 units x $3.50		800 units x $3.20 + 1600 unitsx $3.10 +1600 units x $3.40+2000 units x $3.50
Jun-25		800 units	800 units x $3.20 + 1600 unitsx $3.10 +1600 units x $3.40+(2000-800)=1200 units x $3.50
	Closing Inventory will be
	800 units x $3.20 + 1600 unitsx $3.10 +1600 units x $3.40+1200 units x $3.50 = $17160
2. Answer is D $113700 ( Calculation given below) Units Prices ($) Value ($) Beginning Inventory 7200 12 86400 Purchases First 3000 13 39000 Second 12000 13.5 162000 Total 22200 38.5 287400 Sold 12900 Closing Inventory 9300 This 9300 units will be valued at the earliest cost as the system followed is LIFO 7200 *12+ 2100*13 = $86400+$27300=$113700 3. Answer is B $ 768000 ( calculation given below) Inventory at base year cost Inventory layers Year of layer Inventory at added year cost Inventory (Dollar Value LIFO) 828000/1.10= $752727 $600000 Base layer 600000 $752727-$600000= $ 152727 $152727*1.10= $168000 $768,000