Velocity Bikes uses the perpetual moving average Inventory method to account for inventory costs. On March 1, the company's records showed Beginning Inventory of 50 bikes on hand with a total cost of $12,000. On March 5, 30 additional bikes were purchased at $150 each. The average cost per unit after the March 5 purchase is O a $150 O b. $2,400 O c. $206.25 Od $240. American Widgets Co. has the following layers of inventory: Beginning inventory: 500 @ $1 - $500 Jan. purchase: 200 @ $2 - $100 Mar. purchase: 200 $3-$600 On April 1, the company sold 425 units. How many units remain in the January layer assuming perpetual LIFO? O a. O O b. 200 O c. 100 O d. 25 The last step for applying the gross profit method would be to O a. compute the cost of goods available for sale. O b. estimate cost of goods sold by deducting the normal gross profit from net sales. O c. estimate the ending inventory by deducting cost of goods sold from the cost of goods available for sale. O d. None of these choices are correct. Pluto Co. had the following information available: Beginning inventory: 10 units $520 - $5,200 January purchase: 5 units $600 - $3,000 March purchase: 10 units @ $610 = $6,100 July purchase: 15 units @ $620 - $9,300 . November purchase: 20 units @ $700 = $14,000 The accounting records show that 5 units were sold from beginning inventory, 3 units were sold from the January purchase, and 8 units were sold from the November purchase. Using the Specific Identification method, what amount is cost of goods sold? O a $9,500 O b. $10,000 O c. $27,600 Od. $30,000 Using the gross profit method, what is the estimated cost of goods sold assuming a gross profit rate of 35% for net sales totaling $150,000? O a $97,500 O b. $52,500 Oc $5,250. O d. None of these choices are correct. Pluto Co. had the following information available: Beginning inventory: 10 units @ $520 - $5,200 January purchase: 5 units @ $600 = $3,000 March purchase: 10 units @ $610 - $6,100 July purchase: 15 units @ $620 = $9,300 November purchase: 20 units @ $700 = $14,000 The accounting records show that 35 units were sold. Using the FIFO method, what amount is the cost of ending inventory? O a. $21,500 O b. $17,100 O c. $20,500 O d. None of these choices are correct. Velocity bikes uses the perpetual moving average Inventory method to account for inventory costs. On August 1, the company's records showed Beginning Inventory of 100 bikes on hand with a total cost of $18,000. On August 5, 52 additional bikes were purchased at $200 each. The average cost per unit after the August 5 purchase is O $150 O b. $152. Oc$157.77 O d. $156,84 Credit Fischer Co. new accountant recorded the following journal entries: Account Debit 1. Accounts Payable 150 Purchases Ret.& Allow 22 Purchases 200 150 cash 200 Which of the following is/are true regarding the above journal entries? O a Journal entry +2 indicates that merchandise was purchased paying cash $200. O b. Fischer Co. is using the perpetual inventory system. Oc. Journal entry #1 indicates that merchandise costing $150 was returned by a customer O d. Journal entry #2 indicates that merchandise was purchased on account for $200. If Ending Inventory is overstated, O a. Net Income will be overstated by the same amount in the following year. O b. Cost of Goods Sold will be overstated by the same amount. O c. Cost of Goods Sold will be understated by the same amount O d. Net Income will be overstated by the same amount in the same year. O e. both "Cost of Goods Sold will be understated by the same amount" and "Net Income will be overstated by the same amount in the following year". During July, Bert Co. purchased merchandise from various suppliers. The company uses a periodic inventory system. The accounting records for the month showed the following information: Unit Cost of Units 15 10 $10 Total Cost 5150 200 bo 25 Beginning Inventory Purchase 1 Purchase 2 Purchase 3 Goods Available for Sale Ending Inventory bo 12 240 5615 27 The Cost of Goods Sold using FIFO is O a $255 Ob. $305 Oc $360 O d. $310 Silver Thread company uses the UFO method under the perpetual inventory system. Below is some information from the company's inventory records: Cost/Unit Sales Units Purchase Date Units uly 1-Bes, Inventory 100 $12 uly 5 Purchase DO 35 uly 10 Purchase 10 20 T July 15 Sale The Cost of Goods Sold from the July 15 sale is O a $900 O b. $600 Oc. $500 O d. $540 The retail method of estimating inventory O a requires keeping records of both the cost and retail prices of all goods purchased, O b. is used to estimate cost of goods sold and ending inventory. Oc is used mostly by retail businesses, such as department stores. O d. All of these choices are correct. Taking physical inventory O a. Ideally should be done when the quantity of goods is at its lowest level. O b. is frequently done by businesses after regular business hours. Oc under the periodic system, means counting the goods on hand at the end of the period to allocate costs between sold and unsold goods O d. All of these statements are true
