Ch 8 - ACCT 201A

1. 1Morgan Manufacturing Company has the following account balances at year end:
   Office supplies $ 4,000
   Raw materials 27,000
   Work-in-process 59,000
   Finished goods 97,000
   Prepaid insurance 6,000
   What amount should Morgan report as inventories in its balance sheet?
   

   1. A$97,000.
   2. B$101,000.
   3. C$183,000.
   4. D$187,000.
2. 2Elkins Corporation uses the perpetual inventory and the gross method. On March 1, it purchased $50,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $5,000. On March 9, Elkins paid the supplier. On March 9, Elkins should credit

   1. Apurchase discounts for $1,000.
   2. Binventory for $1,000.
   3. Cpurchase discounts for $900.
   4. Dinventory for $900.
3. 3Bell Inc. took a physical inventory at the end of the year and determined that $840,000 of goods were on hand. In addition, the following items were not included in the physical count. Bell, Inc. determined that $96,000 of goods purchased were in transit that were shipped f.o.b. destination (goods were actually received by the company three days after the inventory count). The company sold $40,000 worth of inventory f.o.b. destination. What amount should Bell report as inventory at the end of the year?

   1. A$840,000.
   2. B$936,000.
   3. C$880,000.
   4. D$976,000.
4. 4The following information is available for Naab Company for 2020:
   Freight-in $ 60,000
   Purchase returns 150,000
   Selling expenses 460,000
   Ending inventory 520,000
   The cost of goods sold is equal to 400% of selling expenses. What is the cost of goods available for sale?
   

   1. A$1,840,000.
   2. B$2,300,000.
   3. C$2,370,000.
   4. D$2,360,000.
5. 5Winsor Co. records purchases at net amounts. On May 5 Winsor purchased merchandise on account, $80,000, terms 2/10, n/30. Winsor returned $6,000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid.
   
   By how much should the account payable be adjusted on May 31?
   

   1. A$ 0.
   2. B$1,720.
   3. C$1,600.
   4. D$1,480.
6. 6The value assigned to ending inventory if Niles uses LIFO is.

   

   1. A$1,160.
   2. B$1,104.
   3. C$1,092.
   4. D$1,168.
7. 7Niles Co. has the following data related to an item of inventory:
   Inventory, March 1 400 units @ $2.10
   Purchase, March 7 1,400 units @ $2.20
   Purchase, March 16 280 units @ $2.25
   Inventory, March 31 520 units
   
   The value assigned to cost of goods sold if Niles uses FIFO is
   

   1. A$1,160.
   2. B$1,104.
   3. C$3,448.
   4. D$3,392.
8. 8June Corp. sells one product and uses a perpetual inventory system. The beginning inventory consisted of 80 units that cost $20 per unit. During the current month, the company purchased 480 units at $20 each. Sales during the month totaled 360 units for $43 each. What is the cost of goods sold using the LIFO method?

   1. A$1,600.
   2. B$7,200.
   3. C$9,600.
   4. D$15,480.
9. 9Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7,200 units that cost $12 each. During the month, the company made two purchases: 3,000 units at $13 each and 12,000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the LIFO method, what is the ending inventory?

   1. A$120,438.
   2. B$111,600.
   3. C$125,550.
   4. D$113,700.
10. 10RF Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $430,080, and the price index was 112.
    
    What is RF Company’s gross profit?
    

    1. A$1,248,000.
    2. B$1,294,080.
    3. C$1,330,380.
    4. D$2,605,920.

11. 11Hay Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $379,500, and the price index was 110.
    
    What is Hay Company’s ending inventory?
    

    1. A$330,000.
    2. B$345,000.
    3. C$349,500.
    4. Dd. $379,500.
12. 12Hay Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $379,500, and the price index was 110.
    
    What is Hay Company’s gross profit?
    

    1. A$1,245,000.
    2. B$1,249,500.
    3. C$1,279,500.
    4. D$2,650,500.
13. 13Using the double-extension method, what is the price index for 2020 that should be computed by Wise Company?

    

    1. A108.33%
    2. B109.59%
    3. C111.05%
    4. D220.51%
14. 14Web World began using dollar-value LIFO for costing its inventory last year. The base year layer consists of $600,000. Assuming the current inventory at end of year prices equals $828,000 and the index for the current year is 1.10, what is the ending inventory using dollar-value LIFO?

    1. A$828,000.
    2. B$768,000.
    3. C$752,727.
    4. D$910,800.
15. 15Willy World began using dollar-value LIFO for costing its inventory two years ago. The ending inventory for the past two years in end-of-year dollars was $300,000 and $450,000 and the year-end price indices were 1.0 and 1.2, respectively. Assuming the current inventory at end of year prices equals $645,000 and the index for the current year is 1.25, what is the ending inventory using dollar-value LIFO?

    1. A$532,500.
    2. B$559,200.
    3. C$570,000.
    4. D$566,250.
16. 16What is the 2019 inventory balance using dollar-value LIFO?

    

    1. A$650,000.
    2. B$619,040.
    3. C$1,227,270.
    4. D$1,350,250.
17. 17How should the following costs affect a retailer's inventory valuation?
    
    Freight-in Interest on Inventory Loan
    

    1. AIncrease No effect
    2. BIncrease Increase
    3. CNo effect Increase
    4. DNo effect No effect
18. 18The following information applied to Howe, Inc. for 2020:
    Merchandise purchased for resale $410,000
    Freight-in 8,000
    Freight-out 5,000
    Purchase returns 2,000
    
    Howe's 2020 inventoriable cost was
    

    1. A$410,000.
    2. B$413,000.
    3. C$416,000.
    4. D$421,000.
19. 19Perez's 2020 cost of sales was

    

    1. A$620,000.
    2. B$650,000.
    3. C$684,000.
    4. D$689,000.
20. 20At December 31, 2020, what amount should Dole report as total accounts payable?

    

    1. A$1,462,000.
    2. B$1,397,000.
    3. C$1,150,000.
    4. D$1,050,000.
21. 21In Moon's December 31, 2020 balance sheet, the accounts payable should be

    

    1. A$1,010,000.
    2. B$1,020,000.
    3. C$1,045,000.
    4. D$1,050,000.
22. 22In its December 31, 2020 balance sheet, Kerr should report accounts payable of

    

    1. A$1,720,000.
    2. B$1,670,000.
    3. C$1,650,000.
    4. D$1,600,000.
23. 23Walsh Retailers purchased merchandise with a list price of $150,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this merchandise as

    1. A$105,000.
    2. B$108,000.
    3. C$117,000.
    4. D$150,000.
24. 24On June 1, 2020, Penny Corp. sold merchandise with a list price of $70,000 to Linn on account. Penny allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made f.o.b. shipping point. Penny prepaid $1,000 of delivery costs for Linn as an accommodation. On June 12, 2020, Penny received from Linn a remittance in full payment amounting to

    1. A$38,416.
    2. B$39,788.
    3. C$39,416.
    4. D$39,186.
25. 25The moving-average unit cost of X inventory at January 31, 2020 is

    

    1. A$2.17.
    2. B$2.21.
    3. C$2.25.
    4. D$2.35.
26. 26During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory cost flow methods?
    
    FIFO LIFO
    

    1. AYes No
    2. BYes Yes
    3. CNo Yes
    4. DNo No
27. 27Hite Co. was formed on January 2, 2020, to sell a single product. Over a two-year period, Hite's acquisition costs have increased steadily. Physical quantities held in inventory were equal to three months' sales at December 31, 2020, and zero at December 31, 2021. Assuming the periodic inventory system, the inventory cost method which reports the highest amount of each of the following is
    
    Inventory December 31, 2020 Cost of Sales 2021
    

    1. ALIFO FIFO
    2. BLIFO LIFO
    3. CFIFO FIFO
    4. DFIFO LIFO
28. 28A physical count on January 31, 2020 shows 400 units of product A on hand. The cost of the inventory at January 31, 2020 under the LIFO method is

    

    1. A$9,400.
    2. B$8,900.
    3. C$8,500.
    4. D$8,200.
29. 29When the double-extension approach to the dollar-value LIFO inventory cost flow method is used, the inventory layer added in the current year is multiplied by an index number. How would the following be used in the calculation of this index number?
    - Ending inventory at current year cost ?
    - Ending inventory at base year cost?
    

    1. ANumerator Denominator
    2. BNumerator Not used
    3. CDenominator Numerator
    4. DNot used Denominator
30. 30Farr Co. adopted the dollar-value LIFO inventory method on December 31, 2020. Farr's entire inventory constitutes a single pool. On December 31, 2020, the inventory was $960,000 under the dollar-value LIFO method. Inventory data for 2021 are as follows:
    12/31/21 inventory at year-end prices $1,320,000
    Relevant price index at year end (base year 2020) 110
    
    Using dollar value LIFO, Farr's inventory at December 31, 2021 is
    

    1. A$1,056,000.
    2. B$1,224,000.
    3. C$1,200,000.
    4. D$1,320,000.

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Quiz on Ch 8 - ACCT 201A, created by Orfa Cartagena on 03/11/2020.

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