Question 6 part a:

A company buys and sells chairs. The following table shows data on its beginning inventory and purchases for 20XX:

	Units	Cost per unit
Beginning inventory, Jan. 1	100	$20
Purchases:
March 12	500	$20
July 9	600	$30
Oct. 28	300	$35

If there are 175 chairs remaining in the ending inventory, the dollar amount of the ending inventory under the Average Cost method would be

a		$3,914.25
b		$4,256.25
c		$5,734.75
d		$6,278.75

b: A company's accounts show the following balances: $4,000 for Purchases, $600 for Transportation-In, $900 for Purchase Returns and Allowances, and $400 for Purchase Discounts. The net purchases would be ____.

a		$2,100
b		$3,300
c		$4,000
d		$4,700
e		$5,900

c: If a company understated its beginning inventory, what effect will this action have on this year's cost of goods sold and net income?

a		cost of goods sold is overstated; net income is understated
b		cost of goods sold is understated; net income is overstated
c		cost of goods sold is not affected; net income is understated
d		cost of goods sold is overstated; net income is not affected
e		cost of goods sold is understated; net income is not affected