Question 1

Which inventory costing method should a gasoline retailer use?

Accepted Answer

The answer of Which inventory costing method should a gasoline...

Question 2

Automobile Audio has the following inventory data: $\begin{array}{rll}
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Ending inventory under FIFO is

Accepted Answer

FIFO (First-In, First-Out) assumes that the first units purchased are the first units sold. Therefore, the ending inventory consists of the units purchased on November 25 (90 units at $6.60 each) and the remaining 10 units from the November 17 purchase (60 units at $6.30 each). The total ending inventory value under FIFO is: (90 units x $6.60) + (10 units x $6.30) = $657.

Question 3

Delightful Discs has the following inventory data: $\begin{array}{rll}
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Ending inventory under LIFO is

Accepted Answer

The answer of Delightful Discs has the following inventory data:...

Question 4

At May 1, 2017, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7. During May, the company purchased inventory as follows:
600 units at $7
900 units at $8
The company sold 1,500 units during the month for $12 per unit. Heineken uses the average cost method. Heineken's gross profit for the month of May is

Accepted Answer

To calculate the gross profit using the average cost method, first determine the average cost per unit: [(300 units * $7) + (600 units * $7) + (900 units * $8)] / 1800 units = $7.50 per unit. The cost of goods sold (COGS) for 1,500 units is 1,500 * $7.50 = $11,250. The total sales revenue is 1,500 units * $12 = $18,000. Gross profit is sales revenue minus COGS: $18,000 - $11,250 = $6,750.

Question 5

Serene Stereos has the following inventory data: $\begin{array}{rll}
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Cost of goods sold under FIFO is

Accepted Answer

The answer of Serene Stereos has the following inventory data:...

Question 6

At May 1, 2017, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7. During May, the company purchased inventory as follows:
600 units at $7
900 units at $8
The company sold 1,500 units during the month for $12 per unit. Heineken uses the average cost method. The value of Heineken's inventory at May 31, 2017 is

Accepted Answer

To calculate the ending inventory using the average cost method, first determine the total cost of all units available for sale and the total number of units. Total cost = (300 units x $7) + (600 units x $7) + (900 units x $8) = $2,100 + $4,200 + $7,200 = $13,500. Total units = 300 + 600 + 900 = 1,800 units. Average cost per unit = $13,500 / 1,800 units = $7.50. Ending inventory = (1,800 units - 1,500 units sold) x $7.50 = 300 units x $7.50 = $2,250.

Question 7

Carryable CDs has the following inventory data: $\begin{array}{rll}
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Cost of goods sold under LIFO is

Accepted Answer

Under LIFO, the last items purchased are the first to be sold. The 100 units on hand mean 200 units were sold. The cost of goods sold is calculated using the most recent purchases: 90 units @ $6.60, 60 units @ $6.30, and 50 units @ $6.45, totaling $1,295.

Question 8

In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

Accepted Answer

The answer of In periods of rising prices, which is...

Question 9

Dole Industries had the following inventory transactions occur during 2017: $\begin{array}{lllll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1.2017 } & \text { Purchase } & 90 & \$ 90 \
\text { Mar. 14.2017 } & \text { Purchase } & 155 & \$ 94 \
\text { Mav 1.2017 } & \text { Purchase } & 110 & \$ 98
\end{array}$ The company sold 255 units at $126 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Accepted Answer

The answer of Dole Industries had the following inventory transactions...

Question 10

Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows: $\begin{array}{llrr}&\text { Units }&\text { Per unit price }&\text { Total }\
\text { Balance, } 1 / 1 / 2017 & 300 & \$ 5.00 & \$ 1.500 \
\text { Purchase, } 1 / 15 / 2017 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 2017 & 150 & 5.50 & 825
\end{array}$ An end of the month (1/31/2017) inventory showed that 240 units were on hand. How many units did the company sell during January 2017?

Accepted Answer

The company started with 300 units and purchased an additional 300 units (150 + 150), totaling 600 units available. With 240 units remaining at the end of the month, the company sold 360 units (600 - 240).

Question 11

Hogan Industries had the following inventory transactions occur during 2017: $\begin{array}{rlll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1,2017 } & \text { Purchase } & 108 & \$ 45 \
\text { Mar. 14,2017 } & \text { Purchase } & 186 & \$ 47 \
\text { May } 1,2017 & \text { Purchase } & 132 & \$ 49
\end{array}$ The company sold 306 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used and operating expenses of $1,800, what is the company's after-tax income using FIFO? (rounded to whole dollars)

Accepted Answer

The answer of Hogan Industries had the following inventory transactions...

Question 12

Hogan Industries had the following inventory transactions occur during 2017: $\begin{array}{rlll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1,2017 } & \text { Purchase } & 108 & \$ 45 \
\text { Mar. 14,2017 } & \text { Purchase } & 186 & \$ 47 \
\text { May } 1,2017 & \text { Purchase } & 132 & \$ 49
\end{array}$ The company sold 306 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Accepted Answer

The answer of Hogan Industries had the following inventory transactions...

Question 13

Dole Industries had the following inventory transactions occur during 2017: $\begin{array}{lllll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1.2017 } & \text { Purchase } & 90 & \$ 90 \
\text { Mar. 14.2017 } & \text { Purchase } & 155 & \$ 94 \
\text { Mav 1.2017 } & \text { Purchase } & 110 & \$ 98
\end{array}$ The company sold 255 units at $126 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, and operating expenses of $2,500, what is the company's after-tax income using LIFO? (rounded to whole dollars)

Accepted Answer

Under LIFO, the last items purchased are the first to be sold. The cost of goods sold (COGS) is calculated using the most recent purchases: 110 units at $98 and 145 units at $94. Total COGS = (110 * $98) + (145 * $94) = $10,780 + $13,630 = $24,410. Revenue from sales = 255 units * $126 = $32,130. Gross profit = $32,130 - $24,410 = $7,720. Operating expenses = $2,500. Pre-tax income = $7,720 - $2,500 = $5,220. After-tax income = $5,220 * (1 - 0.30) = $3,654.

Question 14

Hoover Company had beginning inventory of $15,000 at March 1, 2017. During the month, the company made purchases of $65,000. The inventory at the end of the month is $17,300. What is cost of goods sold for the month of March?

Accepted Answer

The cost of goods sold (COGS) is calculated as: Beginning Inventory + Purchases - Ending Inventory = $15,000 + $65,000 - $17,300 = $62,700.

Question 15

At May 1, 2017, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7. During May, the company purchased inventory as follows:
600 units at $7
900 units at $8
The company sold 1,500 units during the month for $12 per unit. Heineken uses the average cost method. The average cost per unit for May is

Accepted Answer

The answer of At May 1, 2017, Heineken Company had...

Question 16

Hogan Industries had the following inventory transactions occur during 2017: $\begin{array}{rlll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1,2017 } & \text { Purchase } & 108 & \$ 45 \
\text { Mar. 14,2017 } & \text { Purchase } & 186 & \$ 47 \
\text { May } 1,2017 & \text { Purchase } & 132 & \$ 49
\end{array}$ The company sold 306 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, and operating expenses of $1,800, what is the company's after-tax income using LIFO? (rounded to whole dollars)

Accepted Answer

The answer of Hogan Industries had the following inventory transactions...

Question 17

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $270 and used FIFO costing, the gross profit for the period would be

Accepted Answer

The answer of A company just starting in business purchased...

Question 18

Hogan Industries had the following inventory transactions occur during 2017: $\begin{array}{rlll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1,2017 } & \text { Purchase } & 108 & \$ 45 \
\text { Mar. 14,2017 } & \text { Purchase } & 186 & \$ 47 \
\text { May } 1,2017 & \text { Purchase } & 132 & \$ 49
\end{array}$ The company sold 306 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

Accepted Answer

The answer of Hogan Industries had the following inventory transactions...

Question 19

Dole Industries had the following inventory transactions occur during 2017: $\begin{array}{lllll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1.2017 } & \text { Purchase } & 90 & \$ 90 \
\text { Mar. 14.2017 } & \text { Purchase } & 155 & \$ 94 \
\text { Mav 1.2017 } & \text { Purchase } & 110 & \$ 98
\end{array}$ The company sold 255 units at $126 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

Accepted Answer

The answer of Dole Industries had the following inventory transactions...

Question 20

Laser Listening has the following inventory data: $\begin{array}{rll}
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Assuming that the specific identification method is used and that ending inventory consists of 30 units from each of the three purchases and 10 units from the November 1 inventory, cost of goods sold is

Accepted Answer

The answer of Laser Listening has the following inventory data:...

Quiz 5: Reporting and Analyzing Inventory

Which inventory costing method should a gasoline retailer use?

In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

Hoover Company had beginning inventory of $15,000 at March 1, 2017. During the month, the company made purchases of $65,000. The inventory at the end of the month is $17,300. What is cost of goods sold for the month of March?

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $270 and used FIFO costing, the gross profit for the period would be