All Companies Are on a Calendar Year Unless Otherwise Stated

Mastering Inventory

MASTERINGINVENTORY

TESTBANK

Section1INTRODUCTIONTOACCOUNTINGFORINVENTORY

All companies are on a calendar year unless otherwise stated.

1.DuringZipCo’sfirstyearofoperation,itpurchases$125,000ofinventoryonaccount.Ifendinginventoryis$25,000,andsalesare$150,000,whatisZipCo’sfirst-yeargrossprofit?

a.$25,000

b.$50,000

c.$75,000

d.$100,000

2.Fortheyear,FlabCohasbeginninginventoryof$120,000andnetpurchasesof$70,000.Ayear-endphysicalcountofinventoryshows$110,000ininventory.OnFlabCo’sincomestatement,COGSis:

a.$190,000

b.$180,000

c.$80,000

d.$40,000

3.Fortheyear,yourcompany'sgrossprofitis$250,000,salesare$320,000andendinginventoryis$75,000.Ifnetpurchasesare$100,000,thenCOGSis:

a.$70,000

b.$95,000

c.$110,000

d.$130,000

4.DuringAdCo’sfirstyearofoperations,itpurchases$125,000ofinventoryonaccountforatotalof$105,000.IfAdCo’sendinginventoryis$25,000andsalesare$150,000,whatisthe cost of goods sold?

a.$25,000

b.$50,000

c.$75,000

d.$100,000

5.Fortheyear,yourcompany'ssalesare$305,000, thegrossprofitis$250,000,andendinginventoryis$75,000.Ifnetpurchasesare$100,000,beginninginventorymusthavebeen:

a.$30,000

b.$55,000

c.$85,000

d.$120,000

Section2INVENTORYRECORDKEEPINGUSINGTHEPERPETUALMETHOD

All companies are on a calendar year unless otherwise stated.

1.Undertheperpetualmethod,thebalanceintheInventoryaccount:

a.increaseswhencustomersreturnmerchandiseandthecompanyreturnsmerchandisetovendors.

b.decreaseswhencustomersreturnmerchandiseandthecompanyreceivesvendorpurchaseallowances.

c.decreaseswhenmerchandiseissoldandmerchandiseispurchased.

d.increaseswhencustomersreturnmerchandiseanddecreaseswhenthecompanyreturnsmerchandisetovendors.

2.Initsfirstyear,FiCo,whichusestheperpetualmethodandrecordspurchasesatnet,buystwolotsofsweaters,1/10,n/30: onelotonMarch10 for $4,000,paying the invoiceonMarch16; a second lotonJune25 for $2,000, paying the invoiceonJuly9.IfnosweatersaresoldfromMarchthroughJuly,what is thebalanceinFiCo’sInventoryaccountonJuly31?

a.$6,000

b.$5,980

c.$5,960

d.$5,940

3.Ifyourcompanyrecordsinventoryusingtheperpetualnetmethod,then:

a.whenadiscountisnottaken,theInventoryaccountisnotaffected.

b.whenadiscountistaken,theInventoryaccountisaffected.

c.itisassumedthebuyerwillnottakethediscount.

d.noneoftheabove.

4.Yourfirm,whichusestheperpetualmethod,purchases$10,000ofinventory,2/10,n/30 YoudebitInventoryfor$9,800andcreditAccountsPayablefor$9,800.Ifthemerchandiseispaidforwithinthediscountperiod,youwill:

a.debittoAccountsPayablefor$9,800.

b.debittoPurchaseDiscountsLostfor$200.

c.credittoPurchaseDiscountsLostfor$200.

d.credittoInventoryfor$200.

5.Yourcompany,whichusestheperpetualmethod,sellsinventoryonaccountfor$15,000.Ifthecostoftheinventoryis$9,000,youwill:

a.creditInventoryfor$9,000.

b.debitCOGSfor$9,000.

c.creditSalesRevenuefor$15,000.

d.alloftheabove.

6.OnAugust6,yourfirm,whichusestheperpetualmethod,orders$450ofinventoryFOBshippingpoint.Freightis$50.OnAugust24,themerchandisearrivesandyouremit$500.Forthistransaction,youwill:

a.debitInventoryfor$500onAugust24.

b.debitInventoryfor$450onAugust24.

c.debitPurchasesfor$450onAugust6.

d.debitPurchasesfor$500onAugust6.

7.Yourcompany, which uses the perpetual method,purchasesinventoryfor$7,000onaccount, butbeforepayingtheinvoicereturnsdamagedgoodsfora$650credit.What is the journal entry to record this return?

a.PurchaseReturnsandAllowances650

AccountsPayable650

b.AccountsPayable650

Inventory650

c.AccountsPayable650

PurchaseReturnsandAllowances650

d.AccountsPayable650

CostofGoodsSold650

8.OnMarch15,EtCo,whichusestheperpetualmethod,sells on account$50,000ofcomputersfor which it had paid $25,000.Thatsamemonth,20%ofthecomputersarereturnedbeforethebuyerpaytheinvoices.Whatisthejournalentrytorecordthesereturns?

a.SalesReturns10,000

AccountsReceivable10,000

Inventory5,000

PurchaseReturns5,000

b.SalesReturns10,000

AccountsReceivable10,000

c.SalesReturns10,000

Inventory5,000

AccountsReceivable10,000

CostofGoodsSold5,000

d.SalesReturns10,000

GrossProfit5,000

AccountsReceivable5,000

9.Recorded purchasesofinventoryaffect:

a.onlytheincomestatement.

b.onlythebalancesheet.

c.boththebalancesheetandtheincomestatement.

d.noneoftheabove.

10.Initsfirstyearofoperation,FlipCo,whichusestheperpetualmethodandrecordspurchasesatnet,buystwolotsofsweaters,1/10,n/30: the firstlotonMarch10 for$4,000, paying the invoiceonMarch16; thesecondlotonJune25 for$2,000, paying the invoiceonJuly9.IfnosweatersaresoldfromMarchthroughJuly,how will thesepurchasesappearFlipCo’sincomestatementfortheyearendedJuly31?

a.Noeffect,becausetherewerenosales.

b.As alossof$20

c.As alossof$40

d.As a lossof$60

11.Yourcompany,whichusestheperpetualmethod,doesayear-endphysicalcountofinventory.Iftherehasbeenshrinkage,theadjustmentwillinclude:

a.adebittoanassetaccount.

b.acredittoanincomestatementaccount.

c.acredittoanassetaccount.

d.adebittoaliabilityaccount.

Section3INVENTORYRECORDKEEPINGUSINGTHEPERIODICMETHOD

All companies are on a calendar year unless otherwise stated.

1.Undertheperiodicmethod,theyear-endadjustingentryforinventoryaffects:

a.onlytheincomestatement.

b.onlythebalancesheet.

c.boththeincomestatementandthebalancesheet.

d.noneoftheabove.

2.Whichaccountbalanceismissinginthiscomputationofcostofgoodssold?

BeginningInventoryxx,xxx

Purchases x,xxx

GoodsAvailableforSalexx,xxx

?????(xx,xxx)

CostofGoodsSoldxx,xxx

a.PurchaseReturnsandAllowances

b.Freight

c.EndingInventory

d.SalesReturnsandAllowances

3.The following account balances appear on a year-endtrialbalance:MerchandiseInventory,$65,000;Purchases,$250,000;Sales,$600,000;Freight-in,$8,500;SalesReturnsandAllowances,$7,000;andPurchaseReturnsandAllowances,$4,000.Endinginventoryis$45,000.Whatisthe costofgoodssold?

a.$278,500

b.$274,500

c.$270,000

d.$318,500

4.BendCo,whichusestheperiodicmethod,purchasesinventoryfor$2,500cash.What is the journal entry tobookthereturnofgoodsfor$600cash?

a.Cash600

PurchaseReturnsandAllowances600

b.Cash600

Sales600

c.Cash600

MerchandiseInventory600

d.Cash600

CostofGoodsSold600

5.Asellerthatpaysdeliverycostsformerchandisesold:

a.includesthedeliverycostsincostofgoodssold.

b.allocatesthedeliverycostsbetweencostofgoodssoldandendinginventory.

c.addsthedeliverycoststoendinginventory.

d.recordsthedeliverycostsasasellingexpense.

6.Ifyourcompanyusestheperiodicmethod,yourecordasaleby:

a.creditingSales,butdonotmakeanentryinInventory.

b.creditingSalesanddebitingCOGS.

c.debitingSalesandcreditingCOGS.

d.creditingSalesanddebitingInventory.

7.AcmeCo,whichusestheperiodicmethod,purchasesinventoryfor$10,000,2/10,n/30,debitingPurchases for $9,800andcreditingAccountsPayablefor$9,800.If AcmeCo paysforthemerchandiseafterthediscountperiodhaslapsed, you will:

a.debitAccountsPayablefor$10,000.

b.debitPurchaseDiscountsLostfor$200.

c.creditCashfor$9,800.

d.creditMerchandiseInventoryfor$200.

8.MobilCo,whichusestheperiodicmethod,hasbeginninginventoryof$100,000.Duringthefiscalyear,itpurchases$200,000ofinventory,FOBshippingpointwiththesellerpayingthe$8,000shippingcosts.WhatisthebalanceinMobilCo'sPurchasesaccountatyearend?

a.$308,000

b.$300,000

c.$208,000

d.$200,000

9.Ifacompanyusestheperiodicmethod,whichofthefollowingaccountsshouldhavea zerobalanceaftertheend-of-periodadjustingentry ismade?

a.Freight-in

b.BeginningInventory

c.PurchaseReturns

d.Alloftheabove

10.For20X0,Big-Co,whichusestheperiodicmethodandrecordspurchasesatnet,hasbeginninginventoryof$200,000.Big-Co’sdatafor20X1includesthefollowing:

Purchases$150,000

Freight-in8,000

Purchasediscountslost7,000

Purchasereturns15,000

IfBig-Co’sendinginventoryis$110,000,what is theyear-endadjustingjournalentry?

a.EndingInventory110,000

PurchaseReturns15,000

CostofGoodsSold232,000

PurchaseDiscountsLost7,000

Purchases150,000

BeginningInventory200,000

b.EndingInventory110,000

PurchaseReturns15,000

CostofGoodsSold233,000

Purchases150,000

Freight-In8,000

BeginningInventory200,000

c.EndingInventory110,000

PurchaseReturns15,000

PurchaseDiscountsLost7,000

CostofGoodsSold226,000

Purchases150,000

Freight-In8,000

BeginningInventory200,000

d.Noneoftheabove

11.Whenasale is recordedundertheperiodicmethod:

a.onlytheincomestatementisaffected.

b.onlythebalancesheetisaffected.

c.boththebalancesheetandtheincomestatementareaffected.

d.noneoftheabove.

12.Yourcompanypurchases$10,000ofinventory,2/10,n/30,debitsPurchasesfor $10,000andcreditsAccountsPayable for $10,000.Ifyourcompanypaysforthemerchandisebeforethediscountperiodlapses,youwill:

a.debitPurchaseDiscountsLostfor$200.

b.creditPurchaseDiscountsfor$200.

c.debitAccountsPayablefor$9,800.

d.creditPurchasesfor$9,800.

13.Yourcompanypurchases$10,000ofinventory2/10,n/30,debitsInventoryfor $10,000 andcreditsAccountsPayablefor$10,000.Ifyourcompanypaysforthemerchandisebeforethediscountperiodlapses,youwill:

a.debitAccountsPayablefor$9,800.

b.debitCashfor$9,800.

c.creditInventoryfor$200.

d.creditPurchaseDiscountsfor$200.

Section4INVENTORY COSTING: THEWEIGHTED-AVERAGEANDMOVING-AVERAGEMETHODS

All companies are on a calendar year unless otherwise stated.

1.SlickCo, a 20X1start-up that usestheperiodicmethod and weighted-average costing,makesthefollowingmerchandise purchases:

20X1 / Units / Unitcost
March / 450 / $3.00
August / 650 / $3.50
20X2
February / 550 / $4.00
October / 250 / $5.00

Attheendof20X1,there are350unitsinendinginventory.If, in 20X2, SlickCosells800units, what is the20X2costofgoods?

a.$3,100

b.$3,200

c.$4,100

d.$4,200

2.SlickCo, a 20X1 start-up that usestheperiodicmethod and weighted-average costing, makesthefollowingmerchandise purchases:

20X1 / Units / Unitcost
March / 450 / $3.00
August / 650 / $3.50
20X2
February / 550 / $4.00
October / 250 / $5.00

Attheendof20X1,there are350unitsinendinginventory. If800unitsare sold in20X2,then20X2endinginventory will be:

a.$1,400

b.$500

c.$400

d.$1,200

3.FiCo, which uses weighted-average costing, shows the following first-year data:

UnitsUnitcost

January5Purchase:2,4004.50

March25Purchase:2,6005.00

August16Purchase:1,6005.50

November26Purchase:1,2006.00

If FiCo’s a year-endphysicalaccount shows2,600unitsonhand, FiCo’sbalancesheetas of December 31 will show endinginventoryof:

a.$13,260

b.$16,824

c.$39,800

d.$26,533

4.Which of the following statements is correct?

a.Weighted-averagecosting yields a higher amount than a simpleaverage.

b.Weighted-average costing yields a lower amount thana simpleaverage.

c.Weighted-average costing yields the same amountas a simpleaverage.

d.Without specific numbers, there is no way to know whether weighted-average costing or a simple average yields a higher, lower or thesame amount.

5.AlisonInc., whichusestheperpetualmethodandmoving-averagecosting, shows the followingactivityforJanuary:

DateDescriptionQuantityUnitcost

January1Beginninginventory80$15

January5Purchase15017

January8Sale110

January15Purchase5520

January20Sale80

January25Purchase7022

WhatisthecostofgoodssoldfortheJanuary20sale?

a.$1,386

b.$1,397

c.$1,440

d.$1,480

6.AlisonInc., which usestheperpetualmethod and moving-average costing, shows the following activityforJanuary:

DateDescriptionQuantityUnitcost

January1Beginninginventory80$15

January5Purchase15017

January8Sale110

January15Purchase5520

January20Sale80

January25Purchase7022

Alison Inc.’s unitcostfor theJanuary31endinginventory is:

a.$18

b.$18.50

c.$18.87

d.$19.39

7.For 20X1, MacFarlandInc.’sunitsonhandon January1hadaunitcostof$14. MacFarland shows the following data for 20X1:

Date / Purchases / Sales / Unitsonhand
January 1 / 40
February2 / 60units@$15each
March3 / 70units
May12 / 90units@$16each
June22 / 55units
Sept.13 / 75units@$18
November24 / 60units

If MacFarlandusesmoving-averagecosting, what is endinginventory on December 31?

a.$1,015

b.$1,283

c.$1,307

d.$1,353

Section5INVENTORYCOSTINGUSINGTHEFIFOMETHOD

All companies are on a calendar year unless otherwise stated.

1.UnderFIFOcosting:

a.Endinginventoryis alwaysthemostrecentlypurchaseditems.

b.Endinginventoryis alwaystheitems purchased earliest.

c.Endinginventorymay includeitemsfromtheearliestandmostrecentpurchases.

d.Noneoftheabove.

2.SlickCo, which uses the periodic method and FIFO costing,beginsoperationsin20X1 and makes the followingpurchasesduringtheyear:

20X1UnitsUnit cost

March450$3.00

August650$3.50

20X2

February550$4.00

October250$5.00

If SlickCo’s20X2endinginventoryis400units,then the balance sheet as of December 31, 20X2,willshow ending inventory of:

a.$1,275

b.$1,325

c.$1,600

d.$1,850

3.TuCo, whichusestheperiodicmethodandFIFOcosting, makes the following purchasesduringtheyear:

March:700widgetsat$7each

June:900widgetsat$8each

September:200widgetsat$9each

Ifayear-end physical count shows400widgetson hand, TuCo’sbalancesheetwill report inventory of:

a.$2,800

b.$3,089

c.$3,400

d.$3,489

4.SlickCo, which uses the periodic method and FIFO costing,beginsoperationsin20X1 andmakesthefollowingpurchasesduring20X1and20X2:

20X1UnitsUnit cost

March450$3.00

August650$3.50

20X2

February550$4.00

October250$5.00

IfSlickCousesFIFOcostingandsells900units in 20X1 and again in 20X2, then20X2costofgoodssoldwill be:

a.$3,650

b.$2,975

c.$2,925

d.$3,800

5.UnderFIFOcosting:

a.COGS reflects thecost of the mostrecentlypurchaseditems.

b.COGS reflects thecost of the items purchased earliest.

c.COGS reflects the cost of itemsfromtheearliestandmostrecentpurchases.

d.Noneoftheabove.

Section6INVENTORYCOSTINGUSINGTHELIFO METHOD

All companies are on a calendar year unless otherwise stated.

1.CorpCousestheperiodicmethodandLIFO costing.Iftheendinginventoryislessthanthebeginninginventory,thecostofendinginventoryincludes:

a.onlypurchasesfromthecurrentyear.

b.onlypurchasesfromprioryears.

c.purchasesfromboththecurrentandprioryears.

d.nowaytotellin which yearthe purchaseswere made.

2.SlickCo, a 20X1 start-up,usestheperiodicmethod and LIFO costing,purchasesmerchandise as follows:

20X1 / Units / Unitcost
March / 450 / $3.00
August / 650 / $3.50
20X2
February / 550 / $4.00
October / 250 / $5.00

In 20X1, SlickCosells750 units.At year-end 20X2, there are500unitsonhand.SlickCo’sbalancesheet as of December31, 20X2, will showendinginventoryof:

a.$1,550

b.$1,650

c.$2,250

d.$2,350

3.AbCo, whichbeginsoperationsin20X0 andusestheperiodicmethodandLIFOcosting, purchases merchandise as follows:

Month / 20X0 / 20X1 / 20X2
February / 150@$2.00 / 300@$4.00 / 450@$5.50
June / 250@$2.50 / 450@$6.00 / 300@$7.00
August / 100@$3.50 / 50@$4.50 / 350@$6.50
December / 200@$3.00 / 350@$5.00 / 50@$8.00

IfAbCosells450unitsin20X0,then 20X0endinginventory(250units)is:

a.$775

b.$625

c.$575

d.$550

4.AbCo, whichbeginsoperationsin20X0andusestheperiodicmethodandLIFOcosting,purchases merchandise as follows:

Month / 20X0 / 20X1 / 20X2
February / 150@$2.00 / 300@$4.00 / 450@$5.50
June / 250@$2.50 / 450@$6.00 / 300@$7.00
August / 100@$3.50 / 50@$4.50 / 350@$6.50
December / 200@$3.00 / 350@$5.00 / 50@$8.00

If20X0endinginventoryis100unitsand 20X1ending inventory is250units, then AbCo’s balance sheet as of December 31, 20X1, will show inventory of:

a.$1,050

b.$1,000

c.$850

d.$800

5.AbCobeginsoperationsin20X0,usestheperiodicmethodandLIFOcosting, and purchases merchandise as follows:

Month / 20X0 / 20X1 / 20X2
February / 150@$2.00 / 300@$4.00 / 450@$5.50
June / 250@$2.50 / 450@$6.00 / 300@$7.00
August / 100@$3.50 / 50@$4.50 / 350@$6.50
December / 200@$3.00 / 350@$5.00 / 50@$8.00

AbCo's20X0endinginventoryis150units;20X1endinginventory,100unitsand20X2endinginventory,350units.WhatisAbCo's20X2ending inventory?

a.$1,500

b.$1,575

c.$1,900

d.$1,975

6.When units are sold from LIFOinventorylayers, itisreferredtoasa(n):

a.effect

b.liquidation

c.reserve

d.allowance

7.SlickCobeginsoperationsin20X1,usestheperiodicmethodandLIFOcosting, and purchases merchandise as follows

20X1 / Units / Unitcost
March / 450 / $3.00
August / 650 / $3.50
20X2
February / 550 / $4.00
October / 250 / $5.00

IfSlickCosells1,000unitsin20X1,itreportson its 20X1balancesheetendinginventoryof:

a.$300

b.$350

c.$400

d.$500

8.SlickCobeginsoperationsin20X1usestheperiodicmethodandLIFOcosting, and purchases merchandise as follows

20X1 / Units / Unitcost
March / 450 / $3.00
August / 650 / $3.50
20X2
February / 550 / $4.00
October / 250 / $5.00

IfSlickCosells850units in 20X1 and again in 20X2,costofgoodssoldonthe 20X2incomestatement will be:

a.$3,200

b.$3,400

c.$3,600

d.$3,800

Section7INVENTORYCOSTINGUSINGTHELOWEROFCOSTORMARKETRULE

All companies are on a calendar year unless otherwise stated.

1.ApogeeGrouppurchasesforresale2,000calculatorsfor $16 each.Atyearend,the replacement cost is $15 each,theestimatedsellingprice,$21,thedisposalcost,$2,andtheestimatedmarkup,$4. If Apogee uses LCM costing, onaper-unitbasis,whatistheceiling?

a.$21

b.$19

c.$17

d.$15

2.ApogeeGroup purchases forresale2,000calculators for $16 each.Atyearend, the replacement cost is $15 each, the estimatedsellingprice, $21, the disposalcost, $2,and the estimatedmarkup, $4. If Apogee uses LCM costing, onaper-unitbasis,whatisthe floor?

a.$21

b.$19

c.$17

d.$15

3.ApogeeGroup purchases forresale2,000calculators for $16 each.Atyearend, the replacement cost is $15 each, the estimatedsellingprice, $21, the disposalcost, $2,and the estimatedmarkup, $4. If Apogee uses LCM costing, onaper-unitbasis,whatisthe market?

a.$21

b.$19

c.$17

d.$15

4.ApogeeGroup purchases forresale2,000calculators for $16 each.Atyearend, the replacement cost is $15 each, the estimatedsellingprice, $21, the disposalcost, $2,and the estimatedmarkup, $4. If Apogee uses LCM costing, onaper-unitbasis,whatisthelowerofcostormarket?

a.$21

b.$19

c.$17

d.$15

5.Yourcompanyhasnotyetdecided how it will apply LCMto itsinventory.If management wants to minimizethevalueofendinginventory,it should:

a.applyLCMbyitem.

b.applyLCMbygroup,or"byclass."

c.applyLCMtototalinventory.

d.anyoneoftheabove because LCM does not affect the value ofinventory.

6.What is the journal entry to record a difference between a totalinventorycost of$25,000that, underLCMcosting, is valued at$15,000?

a.CostofGoodsSold10,000

Inventory10,000

b.Inventory10,000

CostofGoodsSold10,000

c.LossinInventoryWrite-DowntoMarket10,000

Inventory10,000

d.Inventory10,000

LossinInventoryWrite-DowntoMarket10,000

7.What is the journal entry to record a difference between a totalinventorycost of $25,000 that, under LCM costing, is valued at $24,950?

a.CostofGoodsSold50

Inventory50

b.Inventory50

CostofGoodsSold50

c.LossinInventoryWrite-DowntoMarket50

CostofGoodsSold50

d.Inventory50

LossinInventoryWrite-DowntoMarket50

8.Your company signs apurchasecommitmentof $15,000. At year end, this inventory has a marketvalueof$10,000. What journal entry do you record at year end?

a.CostofGoodsSold5,000

Inventory5,000

b.Inventory5,000

CostofGoodsSold5,000

c.LossinInventoryWrite-DowntoMarket5,000

Inventory5,000

d.Noneoftheabove

9.UpCo signs a purchase commitment for $15,000. At year end, market value is $10,000, so UpCo records the appropriate journal entries. If, when the goods are delivered the following year the market value has recovered to $12,000, what journal entry should UpCo record?

a.EstimatedLiabilityonPurchaseCommitment5,000

Inventory12,000

RecoveryofLossonPurchaseCommitment2,000

Cash15,000

b.Inventory15,000

RecoveryofLossonPurchaseCommitment3,000

Cash12,000

c.EstimatedLiabilityonPurchaseCommitment3,000

Inventory12,000

Cash15,000

d.Noneoftheabove

10.UpCo signs a purchase commitment for $15,000. At year end, market value is $10,000, so UpCo records the appropriate journal entries. If, when the goods are delivered the following year the market value has recovered to $17,000, what journal entry should UpCo record?

a.EstimatedLiabilityonPurchaseCommitment5,000

Inventory15,000

RecoveryofLossonPurchaseCommitment5,000 Cash 15,000

b.Inventory20,000

RecoveryofLossonPurchaseCommitment5,000

Cash15,000

c.Inventory15,000

Cash15,000

d.Noneoftheabove

11.UpCo signs a purchase commitment for $15,000. At year end, market value is $10,000, so UpCo records the appropriate journal entries. If, when the goods are delivered the following year the market value has declined to $8,000, what journal entry should UpCo record?

a.Inventory8,000

LossonPurchaseCommitment7,000

Cash15,000

b.Inventory15,000

Cash15,000

c.Inventory8,000

EstimatedLiabilityonPurchaseCommitment5,000

LossonPurchaseCommitment2,000

Cash15,000

d.Noneoftheabove

12.UpCo signs a purchase commitment for $15,000. At year end, market value is $10,000, so UpCo records the appropriate journal entries. If, when the goods are delivered the following year, the market value remains at $10,000, what journal entry should UpCo record?

a.Noadditionaljournalentryisnecessary

b.EstimatedLiabilityofPurchaseCommitment5,000

Inventory10,000

Cash15,000

c.EstimatedLossofPurchaseCommitment5,000

Inventory10,000

Cash15,000

d.Noneoftheabove.

UpCo’sinventory data is as follows:

Cases
onhand / Cost
percase / Marketpercase
1.GardenSupplies
a.SnailBait / 35 / $80 / $75
b.Isotox / 12 / 20 / 23
c.Shovels / 20 / 100 / 99
2.Hardware
a.Screws / 20 / $80 / $96
b.Brackets / 2 / 35 / 31
c.Nails / 8 / 12 / 12
3.Paint
a.Enamel-1gal. / 22 / $120 / $118
b.SprayCans / 15 / 45 / 54
c.Misc.Brushes / 4 / 30 / 38

WhatisUpCo'sendinginventory,applyingLCMbyitem?

a.$10,082

b.$10,241

c.$9,994

d.$10,517

14.UpCo’s inventory data is as follows:

Casesonhand / Costpercase / Marketpercase
1.GardenSupplies
a.SnailBait / 35 / $80 / $75
b.Isotox / 12 / 20 / 23
c.Shovels / 20 / 100 / 99
2.Hardware
a.Screws / 20 / $80 / $96
b.Brackets / 2 / 35 / 31
c.Nails / 8 / 12 / 12
3.Paint
a.Enamel-1gal. / 22 / $120 / $118
b.SprayCans / 15 / 45 / 54
c.Misc.Brushes / 4 / 30 / 38

WhatisUpCo'sendinginventory,applyingLCMbygroup?

a.$10,241

b.$10,517

c.$9,994

d.$10,082

15.UpCo’s inventory data is as follows:

Casesonhand / Costpercase / Marketpercase
1.GardenSupplies
a.SnailBait / 35 / $80 / $75
b.Isotox / 12 / 20 / 23
c.Shovels / 20 / 100 / 99
2.Hardware
a.Screws / 20 / $80 / $96
b.Brackets / 2 / 35 / 31
c.Nails / 8 / 12 / 12
3.Paint
a.Enamel-1gal. / 22 / $120 / $118
b.SprayCans / 15 / 45 / 54
c.Misc.Brushes / 4 / 30 / 38

WhatisUpCo'sendinginventory,applyingLCMbytotalinventory?

a.$10,082

b.$10,241

c.$10,517

d.$9,994

Testbank1