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1. Purchases of inventory during the year were $450,000. At the end of the year, ending...

1. Purchases of inventory during the year were $450,000. At the end of the year, ending inventory is $200,000 and cost of goods sold is $400,000. What was beginning inventory?

a. $100,000

b. $150,000

c. $250,000

d. $300,000

2. Beginning inventory is $142,000. During the period, a company has three purchases of inventory with a cost of $75,000, $80,000, and $56,000. Also during the period, inventory with a cost of $190,000 was sold to customers for $260,000. What is the ending balance of inventory?

a. $93,000

b. $353,000

c. $21,000

d. $163,000

3.If a company understates its ending balance of inventory in year 1 and it records inventory correctly in year 2, which one of the following is true?

a. Net income is overstated in year 1.

b. Net income is understated in year 2

c. Retained earnings is understated in year 2.

d. Cost of goods sold is understated in year 2.

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