110.A company sells garden hoses and uses the perpetual inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during September were as follows:
September 1:Beginning balance of 18 units at $13 each
September 12:Purchased 30 units at $14 each
September 19:Sold 24 units at $30 selling price each
September 20:Purchased 24 units at $17 each
September 27:Sold 27 units at $30 selling price each
If the ending inventory is reported at $276, what inventory method was used?
A.LIFO method.
B.FIFO method.
C.Weighted average method.
D.Specific identification method.
E.Retail inventory method.
PurchasesSalesBalance
DateUnitsUnit
costTotalUnitsUnit
costTotalUnitsUnit
costTotal
Jan. 118$13$234
Jan. 1230$14$42018$13$234
30$14$420
Jan. 1924$14$33618$13$234
6$14$84
Jan. 2024$17$40818$13$234
6$14$84
24$17$408
Jan. 2724$17$40818$13$234
3$14$423$14$42
21$276
111.Jammer Company uses a weighted average perpetual inventory system and reports the following:
August 2Purchase10 units at $12 per unit.
August 18Purchase15 units at $15 per unit.
August 29Sale20 units.
August 31Purchase14 units at $16 per unit.
What is the per-unit value of ending inventory on August 31?
A.$12.00
B.$13.80
C.$15.42
D.$16.00
E.$17.74
PurchasesCost of goods soldBalance
DateUnitsUnit
costTotalUnitsUnit
costTotalUnitsUnit
costTotal
Aug. 210$12$12010$12.00$120
Aug. 1815$15$22525$13.80*$345
Aug. 2920$13.80$2765$13.80$69
Aug. 3114$16$22419$15.42**$293
*$345/25 units = $13.80/unit
**$293/19 units = $15.42/unit
112.Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method.
June 1Beginning inventory15 units at $20 each
June 15Sale of 6 units for $50 each
June 29Purchase8 units at $25 each
The cost of the ending inventory is:
A.$200
B.$220
C.$380
D.$275
E.$300
PurchasesCost of goods soldBalance
DateUnitsUnit costTotalUnitsUnit costTotalUnitsUnit costTotal
June 115$20$30015$20$300
June 156$20$1209$20$180
June 298$25$2009$20$180
8$25$200
17$380
113.In applying the lower of cost or market method to inventory valuation, market is defined as:
A.Historical cost.
B.Current replacement cost.
C.Current sales price.
D.FIFO.
E.LIFO.
114.Raleigh Co. has the following products in its ending inventory. Compute the lower of cost or market total for inventory applied separately to each product.
ProductQuantityCost per unitMarket per unit
Jelly150$2.002.15
Jam370$2.652.50
Marmalade260$3.103.05
A.$2,040.50.
B.$2,086.50.
C.$2,018.00.
D.$2,109.00.
E.$2,053.50.
Jelly = 150 * $2.00 = $300
Jam = 370 * $2.50 = $925
Marmalade = 260 * $3.05 = $793
Lower of cost or market value = $2,018
115.Generally accepted accounting principles require that the inventory of a company be reported at:
A.Market value.
B.Historical cost.
C.Lower of cost or market.
D.Replacement cost.
E.Retail value.
116.The conservatism constraint prescribes that:
A.When multiple estimates of amounts to be received or paid in the future are equally likely, then the least optimistic amount should be used.
B.A company use the same accounting methods period after period.
C.Revenues and expenses are reported in the period in which they are earned or incurred.
D.All items of a material nature are included in financial statements.
E.All inventory items are reported at full cost.
117.A company's normal selling price for its product is $20 per unit. However, due to market competition, the selling price has fallen to $15 per unit. This company's current inventory consists of 200 units purchased at $16 per unit. Replacement cost has fallen to $13 per unit. Calculate the value of this company's inventory at the lower of cost or market.
A.$2,550.
B.$2,600.
C.$2,700.
D.$3,000.
E.$3,200.
200 units @ $13 per unit = $2,600
118.A company normally sells its product for $20 per unit. However, the selling price has fallen to $15 per unit. This company's current inventory consists of 200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit. What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?
A.$1,000.
B.$1,400.
C.$400.
D.$600.
E.$800.
200 units * ($16 - $13) = $600
119.A company's current inventory consists of 5,000 units purchased at $6 per unit. Replacement cost has now fallen to $5 per unit. What is the entry the company must record to adjust inventory to market?
A.Debit Merchandise Inventory $25,000; credit Cost of Goods Sold $25,000.
B.Debit Cost of Goods Sold $30,000; credit Merchandise Inventory $30,000.
C.Debit Cost of Goods Sold $5,000; credit Merchandise Inventory $5,000.
D.Debit Loss on Inventory $5,000; credit Cost of Goods Sold $5,000.
E.Debit Merchandise Inventory $30,000; credit Cost of Goods Sold $25,000.
5,000 units * ($6 - $5) = $5,000