Question

A company just starting a business purchased three inventory items at the following prices: March 2, $255; March 7, $265; and March 15, $285. If the company sold one unit for $335 on March 10 and one unit for $355 on March 20 and uses the average cost formula in a perpetual inventory system, what is the cost of ending inventory?

$268.33

$355.00

$285.00

$272.50

The Marigold Ltd. purchased $5800 worth of laundry supplies on June 2 and recorded the purchase as an asset in the Supplies account. On June 30, a count of the laundry supplies indicated only $3300 on hand. The adjusting entry that should be made by the company on June 30 is

debit Supplies Expense, $2500; credit Supplies, $2500.

debit Supplies, $3300; credit Supplies Expense, $3300.

debit Supplies, $2500; credit Supplies Expense, $2500.

debit Supplies Expense, $3300; credit Supplies, $3300

Answer 1

1. Answer: $272.50

Calculations:

	Purchases	Cost of goods sold	Ending inventory	Average cost
Mar 2	$ 255		$ 255	$ 255
Mar 7	$ 265		$ 520	$ 260	[$520/2 items]
Mar 10		($ 260)	$ 260
Mar 15	$ 285		$ 545	$ 272.50	[$545/2 items]
Mar 20		($ 272.50)	$ 272.50

.

2.Answer: Debit Supplies expense $ 2500; Credit Supplies, $2500

Explanation:

Adjusting Entry:

Date	Account title and explanation	Debit	Credit
June 30	Supplies expense [$5800-$3300]	$ 2,500
	Supplies		$ 2,500
	[To record supplies expense]