1) Under which of the following situations would net income for the current year be understated?

a.A consignor included merchandise in the hands of the consignee in ending inventory.

b.Purchased merchandise was shipped FOB shipping point on the last day of the year. The cost of the merchandise was not included in ending inventory.

c.Merchandise held on consignment was included in the count of ending inventory.

d.Merchandise was purchased FOB destination on the last day of the year. The cost of the merchandise purchased was not included in ending inventory.

2) Boxwood Company sells blankets for $60 each. The following information was taken from the inventory records during May. The company had no beginning inventory on May 1. Boxwood uses a perpetual inventory system.

Date	Blankets	Units	Cost
May 3	Purchase	5	$20
10	Sale	3
17	Purchase	10	$24
20	Sale	6
23	Sale	3
30	Purchase	10	$30

$144

b.$180

c.$120

d.$136

3) Which of the following inventory cost flow methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

a.specific identification

b.FIFO

c.LIFO

d.weighted average cost

4) Boxwood Company sells blankets for $60 each. The following information was taken from the inventory records during May. The company had no beginning inventory on May 1. Boxwood uses a perpetual inventory system.

Date	Blankets	Units	Cost
May 3	Purchase	5	$20
10	Sale	3
17	Purchase	10	$24
20	Sale	6
23	Sale	3
30	Purchase	10	$30

Determine the May 31 inventory balance using the LIFO inventory costing method.

$324

b.$320

c.$372

d.$364

5) When using a perpetual inventory system, the entry to journalize the cost of goods sold is

a.debit Cost of Goods Sold and credit Inventory

b.No entry is made to journalize the cost of goods sold.

c.debit Inventory and credit Cost of Goods Sold

d.debit Cost of Goods Sold and credit Sales