Financial Accounting 2 Unit 4

Assume that T-Mart uses a periodic weighted average inventory system. Calculate the average cost per unit.
June 1 Beginning Inventory 15 @ $12 = $180June 6 Purchase 5 @ 15 = $75June 27 Purchase 10 @ $18 =$180July 8 Sale 6 units
$18/unit
$15/unit
$16.50/unit
$14.50/unit
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Terms in this set (20)
Assume that T-Mart uses a periodic weighted average inventory system. Calculate the average cost per unit.
June 1 Beginning Inventory 15 @ $12 = $180June 6 Purchase 5 @ 15 = $75June 27 Purchase 10 @ $18 =$180July 8 Sale 6 units
$18/unit
$15/unit
$16.50/unit
$14.50/unit
$14.50/unit
The FIFO cost flow assumption assumes that the cost of items purchased ________________________ (latest, earlier) are the costs that will be transferred first to cost of goods sold on the ________________________________________ (income statement/balance sheet).
(Please type answers in lower case letters. The question will be manually graded by your instructor.)
Answer 1: earlier
Answer 2: income statement
__________ uses an average of the cost of all inventory items currently in stock.
LIFO
FIFO
Average Cost
Average Cost
Assume, that three identical units are purchased separately on the following three dates and at the respective costs:
June 1 at $10June 2 at $15July 4 at $20
The company sells two units during the period. Determine which inventory items are sold first and which units remain in ending inventory if the company is using the LIFO perpetual cost flow assumption.
The June 1 at $10 is sold, the June 2 at $15 and the July 4 at $20 remains in ending inventory
The June 1 at $10 and the June 2 at $15 are both sold; the July 4 unit remains in ending inventory
The June 2 at $15 and the July 4 at $20 are both sold; the June at $10 remains in ending inventory
None of the above are correct
The June 2 at $15 and the July 4 at $20 are both sold; the June at $10 remains in ending inventory
Identify the column that shows the detail about the order in which items are withdrawn from inventory for each sale.
purchases column
merchandise inventory column
cost of merchandise sold column
inventory balance column
cost of merchandise sold column
_____________ assumes cost flow in the order incurred.
FIFO
LIFO
Weighted Average
Specific Identification
FIFO
Assume that Frame's uses a perpetual FIFO inventory system. During the period, it sold 12 units. Calculate the dollar value of the cost of goods sold for the period.
Jan 1 Beginning Inventory 10 @ $12Jan 5 Purchase 10 @ $15Jan 30 Purchase 20 @ $18Feb 8 Sale 12 units
$210
$240
$150
$140
$150
The inventory cost flow assumption where the oldest cost of inventory items is likely to remain the balance sheet
Average Cost
LIFO
FIFO
LIFO
The inventory system that updates the inventory account automatically at the time a purchase or sale is made
Periodic
Perpetual
Perpetual
The inventory cost flow assumption where the cost of the most recent purchase is sold first
FIFO
LIFO
Average Cost
LIFO
Estimates of inventory are not usually required when a company uses a ____________ inventory system because they would presumably have updated inventory data. FIFO perpetual LIFO periodicperpetualAssume that Shade World uses a perpetual inventory system and the FIFO costing method. Its ending inventory consists of 13 units. Calculate the dollar value of its ending inventory. Oct. 1 Beginning Inventory 10 @ $12Oct. 9 Purchase 10 @ $15Oct. 31 Purchase 10 @ $18Nov. 3 Sale 17 units $130 $225 $285 $165$225Assume that Shade World uses a perpetual inventory system and the LIFO inventory method. Its ending inventory consists of 16 units. Calculate the dollar value of its ending inventory. Aug. 1 Beginning Inventory 10 @ 12Aug. 7 Purchase 10 @ $15Aug. 30 Purchase 10 @ $18Sept. 12 Sale 14 units $165 $180 $150 $210$210Which statement (s) below correctly describe (s) the relationship of cost of goods sold and ending inventory? (Select all that apply) cost of goods sold plus ending inventory will equal the total goods available for sale. cost of goods sold plus goods available for sale will equal total goods in ending inventory. Cost of goods available for sale must be allocated between cost of goods sold and ending inventory cost of goods sold will equal total ending inventorycost of goods sold plus ending inventory will equal the total goods available for sale. Cost of goods available for sale must be allocated between cost of goods sold and ending inventoryIdentify the column that shows the details about items that were bought on different dates for resale to customers. purchases column merchandise inventory column cost of merchandise sold column inventory balance columnpurchases columnIdentify the columns that keep a running total of the number of items and their costs on each date. purchases column merchandise inventory column cost of merchandise sold column inventory balance columninventory balance columnIf goods are shipped FOB shipping point, then the ________________________ (seller/purchaser) is responsible for the freight charges and the __________________________ (seller/purchaser) will not include the merchandise in their inventory.purchaser, sellerE-Mart uses a periodic FIFO inventory system. During the period, it sold 14 units. Calculate the dollar value of the cost of goods sold for the period. Jan. 1 Beginning Inventory 10 @ $12Jan. 5 Purchase 10 @ $15Jan. 30 Purchase 10 @$18Feb. 8 Sale 14 units $240 $180 $210 $150$180A-Mart failed to include inventory that was kept in a separate warehouse in its end of the period inventory count. Explain how this error will affect this year's balance sheet. (Select all that apply). This year's total equity will be understated This year's total assets will be overstated This year's total assets will be understated This year's total equity will be overstatedThis year's total equity will be understated This year's total assets will be understatedXYZ Company uses a perpetual inventory system and uses the weighted average cost flow assumptions. During the month, it had two sales. Calculate the dollar value of its costs of goods sold for the first sale made on Jan. 10. Jan 1 Beginning Inventory 8 @$12= $96Jan. 5 Purchase 12 @ $15=$180Jan. 10 Sale 11 units x $50 eachJan. 25 Purchase 10 @$18=$180Jan. 30 Sale 3 units x $55 each $167.20 $151.80 $148.50 $110$151.80