Chapter 7 Accounting for Merchandise Inventory Quiz

TRUE / FALSE

1. Both the beginning and ending merchandise inventory amounts are included in the Cost of Goods Sold section of the income statement. True or False

2. The first-in, first-out (FIFO) method of costing an inventory assumes that the first goods purchased are the last goods sold. True or False

3. Under the LIFO method of costing an inventory, the goods on hand at the end of the accounting period are assumed to represent the latest costs. True or False

Multiple Choice

4. The beginning inventory for Goodman Appliances consists of 600 units valued at $500 each. Two purchases of 500 units each were made during the year at $525 and $550 per unit, respectively. A physical count reveals 95 units on hand on December 31, which is the end of the accounting period. Assuming that the company values inventory by a periodic LIFO system, what is the cost of goods sold for the current period?

a. $787,773

b. $790,000

c. $785,250

d. $780,000

5. The beginning inventory for North Company consists of 150 units valued at $25 each. Four purchases of 50 units each were made during the year at $25.50, $26, $27, and $29 per unit, respectively. A physical count reveals 90 units on hand on December 31, which is the end of the accounting period. Assuming that the company values inventory by a periodic FIFO system, what is the cost of goods sold for the current period?

a. $6,770

b. $6,810

c. $6,595

d. $6,875

6. The beginning inventory for Lucas Company consists of 200 units valued at $15 each. Three purchases of 45 units each were made during the year at $15, $16, and $16.50 per unit, respectively. What is the average cost per unit using a weighted-average inventory costing system? Round the per unit cost to two decimals.

a. $15.00

b. $15.34

c. $16.50

d. $16.00