Accounting Review

Acct. Review Chapter 8

42. Harris Corporation’s inventory of a particular product includes 200 units purchased at a per-unit cost of $50, and another 100 units purchased at a unit cost of $60. If Harris sells 10 units of this product, the cost of goods sold will be:
A. $500.
B. $550.
C. $660.
D. The answer will depend upon the inventory flow assumption in use.

Castle TV, Inc. purchased 1,000 monitors on January 5 at a per-unit cost of $185, and another 1,000 units on January 31 at a per-unit cost of $230. In the period from February 1 through year-end, the company sold 1,800 units of this product. At year-end, 200 units remained in inventory.

102. Refer to the above data. Assume that Castle TV, Inc. uses the FIFO flow assumption. The cost of the 200 units in inventory at year-end is:
A. $41,500.
B. $46,000.
C. $37,000.
D. Some other amount.

103. Refer to the above data. Assume that Castle TV, Inc. uses the LIFO flow assumption. The cost of the 200 units in the year-end inventory is:
A. $37,000.
B. $46,000.
C. $41,500.
D. Some other amount.

104. Refer to the above data. Assume that the replacement cost of this monitor at year-end is $220 per unit. Using the FIFO flow assumption and the lower-of-cost-or-market rule, Castle TV should write down the carrying value of this inventory by:
A. $0.
B. $1,000.
C. $2,000.
D. Some other amount.

Harding Systems, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below:

At December 31 the ending inventory consisted of 1,500 units.

107. Refer to the above data. Compute the cost of the ending inventory based on the LIFO method of inventory valuation.
A. $12,500.
B. $27,650.
C. $10,975
D. $29,175.

108. Refer to the above data. Compute the cost of goods sold for the current year based on the LIFO method of inventory valuation.
A. $12,500.
B. $29,175.
C. $10,975.
D. $27,650

109. Refer to the above data. Compute the cost of the ending inventory based on the FIFO method of inventory valuation.
A. $12,500.
B. $29,175.
C. $10,975.
D. $27,650.

110. Refer to the above data. Compute the cost of goods sold for the current year based on the FIFO method of inventory valuation.
A. $12,500.
B. $29,175.
C. $10,975.
D. $27,650.

111. Refer to the above data. Compute the cost of the ending inventory based on the average-cost method of inventory valuation. (Rounded)
A. $10,590.
B. $11,700.
C. $29,560.
D. $28,450.

112. Refer to the above data. Compute the cost of goods sold for the current year based on the average- cost method of inventory valuation.
A. $10,590.
B. $11,700.
C. $29,560.
D. $28,450.

115. For the last several years Conway Corporation has operated with a gross profit rate of 40%. On January 1 of the current year the company had on hand inventory with a cost of $600,000. Purchases of merchandise during January amounted to $150,000, and sales for the month were $360,000. Using the gross profit method, what is the estimated inventory at January 31?
A. $144,000.
B. $216,000.
C. $360,000.
D. $534,000.

116. During January, Sundown Corporation had sales of $300,000 and a cost of goods available for sale of $600,000. The company consistently earns a gross profit rate of 45%. Using the gross profit method, the estimated inventory at January 31 amounts to:
A. $135,000.
B. $435,000.
C. $165,000.
D. $465,000.

117. Colonial uses the retail method to estimate its monthly cost of goods sold and month-end inventory. At August 31, the accounting records indicate the cost of goods available for sale during the month (beginning inventory plus purchases) totaled $270,000. These goods had been priced for resale at $675,000. Sales in August totaled $450,000. The estimated inventory at August 31 is:
A. $48,000.
B. $90,000.
C. $120,000.
D. Some other amount.

118. Garden World uses the retail method to estimate its monthly cost of goods sold and month-end inventory. At May 31, the accounting records indicate the cost of goods available for sale during the month (beginning inventory plus purchases) totaled $540,000. These goods had been priced for resale at $900,000. Sales in May totaled $480,000. The estimated inventory at May 31 is:
A. $540,000.
B. $252,000.
C. $420,000.
D. Some other amount.

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