Question

# A company just starting a business purchased three inventory items at the following prices: March 2,...

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

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:

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

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