Whitby Inc is a wholesaler that uses a perpetual inventory system The companys accounting records provided the following transactions for Product B during the fiscal year ended on December 31, 2020 Date transaction units unit cost sale price March purchase 19000 9 June sale 10000 27 Sep purchase 8000 11 Nov sale 16000 30 Additional information The beginning inventory consisted of 7,000 units at a total cost of $56,000 All sales are made on account with credit terms, 2 10, n 30 Customers who purchased 10,000 units on November 20 paid the amount due within the discount period All other customers paid their accounts receivable after the discount period At the start of each question below, we indicate whether the First in, First out (FIFO) method or the Weighted Average Cost (WAC) method is used (FIFO) The cost of ending inventory at December 31, 2020 is A $11,000 B $88,000 C $80,000 D $10,000 (FIFO) The cost of sales for 2020 is A S248,000 B $235,000 C $227,000 D $304,000 (FIFO) The gross profit percentage for 2020 is A 69 49 B 69 73 C 68 41 D 59 14 E None of the other percentages (FIFO) Assume for this question only that the cost of sales is $240,000 In that case, the inventory turnover ratio for 2020 would equal A 3 33 B 2 45 C 3 53 D 43 63 E None of the other ratios (WAC) The average cost per unit of the 10,000 units sold on June 15 is A $10 B $9 33 C $8 50 D $8 73 If Whitby used a periodic inventory system instead of a perpetual system, which of the following statement would be correct A If the FIFO method is used, the cost of sales under the periodic system would be different from the cost of sales under the perpetual system B If the WAC method is used, the cost of ending inventory at December 31, 2020 under the periodic system would be smaller than the cost of ending inventory under the perpetual system C There is a need for a physical inventory count if the periodic system is used, but that is not necessary if the perpetual system is used D Both inventory control systems are equally efficient in keeping track of inventory quantities and costs throughout the accounting period Assume that Whitby purchased goods for $2,000 from a local supplier on December 30, 2020 with terms F O B shipping point The merchandise had not arrived at the companys warehouse until January 2, 2021, and was not included in the inventory count at year end What effect would this error have on the companys cost of sales and net earnings for 2020 The companys income tax rate is 40 percent A Understated by $2,000 Overstated by $1,200 B Overstated by $2,000 Understated by $1,200 C Understated by $2,000 Overstated by $800 D Overstated by $2,000 Understated by $800

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Whitby Inc. is a wholesaler that uses a perpetual inventory system. The companys accounting records provided the following transactions for Product B during the fiscal

Whitby Inc. is a wholesaler that uses a perpetual inventory system. The companys accounting records provided the following transactions for Product B during the fiscal year ended on December 31, 2020.

Date	transaction	units	unit cost	sale price
March	purchase	19000	9
June	sale	10000		27
Sep	purchase	8000	11
Nov	sale	16000		30

Additional information:

The beginning inventory consisted of 7,000 units at a total cost of $56,000.
All sales are made on account with credit terms, 2/10, n/30.
Customers who purchased 10,000 units on November 20 paid the amount due within the discount period. All other customers paid their accounts receivable after the discount period.

At the start of each question below, we indicate whether the First-in, First-out (FIFO) method or the Weighted Average Cost (WAC) method is used.

(FIFO) The cost of ending inventory at December 31, 2020 is:

$11,000.

$88,000.

$80,000.

$10,000.

(FIFO) The cost of sales for 2020 is:

S248,000.

$235,000.

$227,000.

$304,000.

(FIFO) The gross profit percentage for 2020 is:

69.49%

69.73%

68.41%

59.14%

None of the other percentages.

(FIFO) Assume for this question only that the cost of sales is $240,000. In that case, the inventory turnover ratio for 2020 would equal:

3.33

2.45

3.53

43.63

None of the other ratios.

(WAC) The average cost per unit of the 10,000 units sold on June 15 is:

$10

$9.33

$8.50

$8.73

If Whitby used a periodic inventory system instead of a perpetual system, which of the following statement would be correct?

If the FIFO method is used, the cost of sales under the periodic system would be different from the cost of sales under the perpetual system.

If the WAC method is used, the cost of ending inventory at December 31, 2020 under the periodic system would be smaller than the cost of ending inventory under the perpetual system.

There is a need for a physical inventory count if the periodic system is used, but that is not necessary if the perpetual system is used.

Both inventory control systems are equally efficient in keeping track of inventory quantities and costs throughout the accounting period.

Assume that Whitby purchased goods for $2,000 from a local supplier on December 30, 2020 with terms F.O.B. shipping point. The merchandise had not arrived at the companys warehouse until January 2, 2021, and was not included in the inventory count at year end. What effect would this error have on the companys cost of sales and net earnings for 2020? The companys income tax rate is 40 percent.

Understated by $2,000 Overstated by $1,200

Overstated by $2,000 Understated by $1,200

Understated by $2,000 Overstated by $800

Overstated by $2,000 Understated by $800