CSO 2.2, 2.3

K L B D E F G H J M 294 21. Ending inventory is made up of the oldest purchases when a company uses 295 296 A. last-in, first-out 297 B. retail method 298 C. average cost 299 D. first-in, first-out 300 301 When merchandise sold is assumed to be in the order in which the purchases were made, the company is 302 22. using 303 304 A. last-in, first-out 305 B. average cost 306 C. first-in, first-out 307 D. first-in, last-out 308 309 310 For problems 23. and 24., refer to the following information related to Addison, Inc. 311 Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for 312 the month of September: 313 314 Sep. 1 Inventory 20 units at $20 315 4 Sold 10 units 316 10 Purchased 30 units at $25 317 17 Sold 20 units 318 30 Purchased 10 units at $30 319 320 23. If Addison uses FIFO, the value of the ending merchandise inventory on the September 30 balance sheet is 321 322 A. 650 323 B. 700 324 C. 750 325 D 800 326 330 331 24 If Addison uses LIFO, the value of the ending merchandise inventory on the September 30 balance sheet is 332 333 A. 650 334 B. 700 335 C. 750 336 800 337 341 342 25. When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is: 343 344 A. Dr. Cost of Merchandise Sold 345 Cr. Merchandise Inventory 346 B. No journal entry is required. 347 C. Dr. Merchandise Inventory 348 Cr. Cost of Merchandise Sold 349 D. Dr. Cost of Merchandise Sold 350 Cr. Sales