Question

If a company uses a periodic inventory system, which of the following entry or entries is/are required to record the sale of merchandise on account?

I	Debit Accounts Receivable; Credit Sales Revenue
II	Debit Cost of Goods Sold; Credit Purchases
III	Debit Cost of Goods Sold; Credit Inventory
IV	Both I & III are necessary entries

Select one:

a.

II

b.

III

c.

IV

d.

I

In a period of rising prices, which method would yield the lowest ending inventory, highest net income and the lowest amount of income taxes?

Select one:

a.

III

b.

IV

c.

I

d.

II

An understatement of the ending inventory in 2012 will have the following effects on the cost of goods sold (COGS) and net income in 2012:

	COGS	Net Income
I	Overstate	Overstate
II	Overstate	Understate
III	Understate	Overstate
IV	Understate	Understate

Select one:

a.

II

b.

I

c.

IV

d.

III

the following data is taken from the records of Empire Ltd.

What is the value of COGS under the average costing method?

Select one:

a.

$1,210

b.

$1,000

c.

$346

d.

$864

Using the AVCO/Weighted Average Method, what is the value of ending inventory after accounting for the transaction at May 1?

Select one:

a.

8,000 units @ $109 each

b.

7,200 units @ $109.50 each

c.

8,000 units at $109.50 each

d.

7,200 units @$109.44each

On June 13, 20X8, a fire completely destroyed all the inventory of Salmon Lumber Company. Fortunately, the books were not destroyed in the fire. The following information is taken from the books of Salmon Lumber Company for the period January 1, 20X8 through June 13, 20X8.

The estimated merchandise inventory destroyed in the fire on June 13, 2014, using the gross profit method is:

Select one:

a.

$440,000

b.

$240,000

c.

$250,000

d.

$210,000

A company uses the periodic inventory system. The company began the month with zero inventory balance. They had the following transactions during the month of April

At the end of the month, they counted the inventory and found 55 units remaining.

If the company uses the FIFO costing method, how much was the Cost of Goods Sold for the month?

Select one:

A.

$541

B.

$582

C.

$626

D.

$680

Miller's Fashion House sells a variety of items of clothing including footwear for men. The business began the last quarter of 2014 with 25 pairs of the "Jordan” brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter.

Using the FIFO method, the value of purchases and COGS after accounting for the transaction on November 1, 2014 are:

Select one:

A.

$1,041,500 and $742,500

B.

$1,194,000 and $571,500

C.

$1,041,500 and $565,250

D.

$1,194,000 and $742,950

Miller's Fashion House sells a variety of items of clothing including footwear for men. The business began the last quarter of 2014 with 25 pairs of the "Jordan” brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter.

Using the FIFO method, what is the ending inventory balance at November 1, 2014?

Select one:

A.

95 pairs valued at $622,500

B.

95 pairs valued at $628,750

C.

70 pairs valued at $444,500

D.

70 pairs valued at $474,250

Miller's Fashion House sells a variety of items of clothing including footwear for men. The business began the last quarter of 2014 with 25 pairs of the "Jordan” brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter.

What is the accounting treatment if we are using the FIFO method for the transaction on November 14, 2014?

Select one:

A.

5 pairs would be taken out of COGS at a rate of $6,775 per pair.

B.

5 pairs would be taken out of COGS at the FIFO rate and inventory ending balance would be increased.

C.

5 pairs would be taken out of COGS at a rate of $6,775 per pair and inventory balance would be increased.

D.

5 pairs would be taken out of purchases at a rate of $6,775 per pair and the inventory ending balance would be decreased.

Miller's Fashion House sells a variety of items of clothing including footwear for men. The business began the last quarter of 2014 with 25 pairs of the "Jordan” brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter.

What is the accounting treatment if we are using the FIFO method for the transaction on December 2, 2014?

Select one:

A.

4 pairs would be taken out of COGS at the LIFO rate and inventory ending balance would be increased.

B.

4 pairs would be taken out of purchases at a rate of $6,775 per pair and the inventory ending balance would be decreased.

C.

4 pairs would be taken out of COGS at a rate of $6,775 per pair and inventory balance would be increased.

D.

4 pairs would be taken out of COGS at a rate of $6,350 per pair and inventory balance would be increased

Answer 1

Dear student, we cannot able to post solution more than four sub-parts of the question as per our policy.

	Answer 1
	Under periodic inventory system, only one journal entry would be required to record the sale of merchandise on account.
	Option D is correct. [I] [Debit Accounts Receivable; Credit Sales Revenue]
Date	Accounts titles	Debit	Credit
	Accounts receivable
	Sales revenue
	(To record sales revenue on account.)
	Answer 2
	During prices rising the period, price will be increasing the period.
	FIFO method helps to determine the ending inventory using the most recent value (It means the most recent value = higher value)
	LIFO method helps to determine the ending inventory using the most oldest value (It means the most oldest value = lower value).
	LIFO method would yield the lowest ending inventory.	LIFO
	FIFO method would yield the higher ending inventory and it results in lower cost of goods sold. Thus, FIFO method would yield the highest net income.	FIFO
	LIFO method would yield the lowest ending inventory and it results in higher cost of goods sold. Thus, FIFO method would yield the lowest pretax income and results in lowest amount of income taxes.	LIFO
	Answer 3
	An understatement of the ending inventory in 2012 will have result in overstatement of the cost of goods sold (COGS).
	An understatement of the ending inventory in 2012 will have result in understatement of the net income.
	Option A is correct. [II] [ COGS = Overstate, Net Income = Understate]
	Answer 4
	Provide the data of Empire Ltd.