7. Assuming rising prices, which method will give the highest dollar value for cost of goods sold on

the income statement? (3 points)

a. FIFO

b. Average Cost

C. LIFO

d. All of these give equal values for cost of goods sold

8. On December 31, before adjusting entries, Accounts Receivable had a debit balance of $100,000,

and the Allowance for Doubtful Accounts had a credit balance of $3,000. Credit sales for the year

were $800,000. If credit losses are estimated at 1% of credit sales: (3 points)

A) The balance of the Allowance for Doubtful Accounts will be $5,000 after adjustment.

B) The balance of the Allowance for Doubtful Accounts will be $11,000 after adjustment.

C) The balance of the Allowance for Doubtful Accounts will be $8,000 after adjustment.

D) Bad Debts Expense for the vear will be $11,000.

E) None of the above