Question
Q1: XYZ Company uses a periodic inventory system. The beginning balance of inventory and the purchases made by XYZ during the month of July are
Q1:
XYZ Company uses a periodic inventory system. The beginning balance of inventory and the purchases made by XYZ during the month of July are given below:
Date | Description | Units | Unit cost | Total cost |
July 01 | Beginning inventory | 500 | $20 | $10,000 |
July 18 | Inventory purchased | 800 | $24 | $19,200 |
July 25 | Inventory purchased | 700 | $26 | $18,200 |
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Total | 2,000 | $47,400 | ||
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The XYZ Company sold 1,400 units during the month of July.
Required: Compute inventory on 31st July and cost of goods sold for the month of July using FIFO inventory costing method:
_______________
Q2:
ALPHA Company reported the following year-end information:
Cash | $ 52,000 |
Short-term investments | 12,000 |
Accounts receivable | 54,000 |
Inventory | 325,000 |
Prepaid expenses | 17,500 |
Accounts payable | 106,500 |
Other current payables | 25,000 |
Instructions: 1- Explain the purpose of the acid-test ratio. 2- Calculate the acid-test ratio for ALPHA Company.
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