Multiple choice 2

Chapter 05- Accounting for Inventories 7. The following information was taken from the records of Bob's Bikes: Cost Market Value Item Quantity per Unitper Unit 50 S 9 20 10 10 Bob's reports inventory at the lower of cost or market (applied individually). The necessary adjusting en- try would a. reduce assets and equity by S200 b. increase assets and equity by $1,100. c. reduce assets and equity by $180 d. reduce assets and increase liabilities by $200 8. Taylor Company uses the periodic inventory method and wants to estimate the amount of ending inventory in order to prepare quarterly financial statements. Sales for the quarter were $26,000. Based on historical records, the company earns an average gross margin of 25 percent on sales. Beginning inventory for the quarter was $7,000 and purchases were $14.200. The amount of ending inventory was a. S6,500 b. $1,700 c. $21,200. d. $19,500. Use the following information to answer the next two questions. ABC Company reports the following in- formation about i inventory activity for 2008: Quantity PerUnit ty Cost Cost/Sales Ist purchase 2nd purchase 200 150 110 220 $2.00 $2.10 $2.15 9. Assuming the company uses the perpetual inventory method and LIFO cost flow, cost of goods sold re- ported on the 2008 income statement would be a. $473.00. b. $704.00. c. $455.00 d. $467.50 10. Using the moving weighted average inventory cost flow method, the average unit cost after the first pur- chase would be (rounded to the nearest penny). a. S2.15 b. $2.04 c. $2.12 d. $2.09