Question

The 2020 inventory data for Garden Corporation’s patio furniture Bermuda set is presented below. Assume that Garden uses periodic inventory tracking.

2020 Beginning Inventory (purchased in 2019)		50 units @ $280 per unit
Purchases:
Purchase 1 on 1/20/20		150 units @ $300 per unit
Purchase 2 on 6/15/20		600 units @ $320 per unit
Sales:
Sale 1 on 4/8/20		275 units @ $600 per unit
Sale 2 on 9/25/20		430 units @ $600 per unit

When Garden examines the actual units in ending inventory, they see that 15 of the units are from 2020 beginning inventory, 20 units are from the 1/20/20 purchase, and 60 units are from the 6/15/20 purchase.  

1. What is Inventory on the 12/31/20 Balance Sheet if Garden uses FIFO?
   1. $223,500
   2. $220,600
   3. $30,400
   4. $27,500

2. What is Cost of Goods Sold on the 2020 Income Statement if Garden uses LIFO?
   1. $223,500
   2. $220,600
   3. $30,400
   4. $27,500

3. What is Inventory on the 12/31/20 Balance Sheet if Garden uses Specific Identification?
   1. $223,500
   2. $221,600
   3. $29,400
   4. $27,500

4. What is Gross Profit on the 2020 Income Statement if Garden uses Weighted Average Cost?
   1. $251,000.00
   2. $221,193.75  
   3. $201,806.25   
   4. $29,806.25

5. In a period of falling prices, which of the following statements is true?
   1. FIFO produces a lower amount of net income than LIFO
   2. LIFO produces a lower cost for ending inventory than FIFO
   3. Average cost produces a higher net income than FIFO or LIFO
   4. LIFO produces a higher cost of goods sold than FIFO

6. Heavenly Rest, Inc. uses a periodic inventory system. When a warehouse supervisor counts the inventory on December 31, 2019, he accidentally counts one pile of blankets twice, resulting in 2019 ending inventory being overstated by $100,000. The warehouse supervisor counts the December 31, 2020 inventory correctly. Which of the following statements is true related to Heavenly Rest's 2019 and 2020 financial statements?
   1. 2019 Cost of Goods Sold will be understated by $100,000.
   2. 2020 Beginning Inventory will be understated by $100,000.
   3. 2020 Cost of Goods Sold will be overstated by $100,000.
   4. All of the above are true.
   5. Both a and c are true.

7. On October 28, Unilever sells and ships $100,000 worth of merchandise to Target. The goods are shipped FOB shipping point and arrive at Target stores on November 4. Which of the following statements is TRUE?
   1. The goods are in transit on October 31 so neither company includes the $100,000 as part of its October 31 Inventory balance.
   2. Unilever includes the $100,000 as part of its October 31 Inventory balance.
   3. Target includes the $100,000 as part of its October 31 Inventory balance.
   4. Both companies include the $50,000 as part of their October 31 Inventory balances.

Answer 1