ACCN 2010 Quiz 6

ACCN 2010 Quiz 6 | Tulane University

Question 1

Bonita has the following inventory data:

 

Nov. 1                   Inventory                            26 units @ $5.30 each

8                              Purchase                             106 units @ $5.70 each

17                           Purchase                             53 units @ $5.55 each

25                           Purchase                             79 units @ $5.80 each

 

A physical count of merchandise inventory on November 30 reveals that there are 88 units on hand. Cost of goods sold under FIFO is

·         $491.

·         $1003.

·         $508.

·         $986.

 

Question 2

Given equal circumstances, which inventory method would probably be the most time-consuming?

·         FIFO

·         Specific identification

·         Average-cost

·         LIFO

 

Question 3

Bonita has the following inventory data:

Nov. 1                   Inventory                            26 units @ $5.30 each

8                              Purchase                             106 units @ $5.70 each

17                           Purchase                             53 units @ $5.55 each

25                           Purchase                             79 units @ $5.80 each

A physical count of merchandise inventory on November 30 reveals that there are 88 units on hand. Ending inventory under LIFO is

·         $1003.

·         $986.

·         $491.

·         $508.

 

Question 4

Pina Colada Corp. had the following inventory transactions occur during 2022:

                                                                Units                     Cost/unit

Feb. 1, 2022                        Purchase                             119                         $50

Mar. 14, 2022                     Purchase                             205                         $52

May 1, 2022                        Purchase                             145                         $54

 

 

The company sold 337 units at $69 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, and operating expenses of $1980, what is the company’s after-tax income using LIFO?

·         $3961.00

·         $3459.00

·         $2772.70

·         $2421.30

 

Question 5

Concord Corporation had the following inventory transactions occur during 2022:

                                                                Units                     Cost/unit

Feb. 1, 2022                        Purchase                             72                           $72

Mar. 14, 2022                     Purchase                             124                         $75

May 1, 2022                        Purchase                             88                           $78

 

The company sold 204 units at $101 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?

·         $15108

·         $15564

·         $5040

·         $5496

 

Question 6

Vaughn Manufacturing had beginning inventory of $15300 at March 1, 2022. During the month, the company made purchases of $66300. The inventory at the end of the month is $17650. What is cost of goods sold for the month of March?

·         $66300

·         $81600

·         $63950

·         $83950

 

Question 7

On May 1, 2022, Concord Corporation had beginning inventory consisting of 240 units with a unit cost of $6. During May, the company purchased inventory as follows:

▪ 480 units at $6

▪ 720 units at $6

The company sold 1200 units during the month for $10 per unit. Concord Corporation uses the average cost method. Concord Corporation's gross profit for the month of May is (Round average cost per unit to 2 decimal places, e.g. 12.52.)

·         $4800.

·         $8640.

·         $12000.

·         $7200.

 

Question 8

In a period of rising prices, which of the following inventory methods generally results in the lowest amount of net income?

·         Average cost method

·         LIFO method .

·         FIFO method

·         Need more information to answer

 

Question 9

The specific identification method of inventory costing

·         always minimizes a company's net income.

·         has no effect on a company's net income.

·         may enable management to manipulate net income

·         always maximizes a company's net income.

 

Question 10

Use the following information regarding Wildhorse Co. and Ayayai Corp. to answer the question “Which amount is equal to Ayayai Corp. "days in inventory" for 2021 (to the closest decimal place)?” (Use 365 days for calculation.)

*             Year       Inventory Turnover        Ending Inventory

Wildhorse Co.    2020       *             $26340

*             2021       8.2          $29890

*             2022       7.9          $30100

*                                            

Ayayai Corp.       2020       *             $25860

*             2021       6.6          $24750

*             2022       7.1          $22530

·         46.2 days

·         55.3 days

·         51.4 days

·         44.5 days

 

Question 11

Use the following information regarding Sandhill Co. and Wildhorse to answer the question “Which of the following is Wildhorse's "cost of goods sold" for 2022 (to the closest dollar)?”

*             Year       Inventory Turnover        Ending Inventory

Sandhill Co.         2020       *             $26390

*             2021       8.7          $29940

*             2022       8.1          $30410

*                                            

Wildhorse           2020       *             $25860

*             2021       7.2          $24710

*             2022       7.8          $22470

 

·         $184002

·         $239665

·         $260478

·         $239665

 

Question 12

If beginning inventory is understated by $11000, the effect of this error in the current period is

 

                Cost of Goods Sold          Net Income

·         overstated          understated

·         understated       overstated

·         overstated          overstated

·         understated       understated

 

Question 13

Manufactured inventory that has begun the production process but is not yet completed is

·         work in process.

·         finished goods.

·         raw materials.

·         merchandise inventory.

 

Question 14

If goods in transit are shipped FOB destination

·         no one has legal title to the goods until they are delivered.

·         the buyer has legal title to the goods until they are delivered.

·         the transportation company has legal title to the goods while the goods are in transit.

·         the seller has legal title to the goods until they are delivered.

 

Question 15

At December 31, 2022, Sunland Company inventory records indicated a balance of $877000. Upon further investigation it was determined that this amount included the following:

·         ▪ $187000 in inventory purchases made by Sunland shipped from the seller 12/27/22 terms FOB destination, but not due to be received until January 2nd

·         ▪ $113000 in goods sold by Sunland with terms FOB destination on December 27. The goods are not expected to reach their destination until January 6.

·         ▪ $9300 of goods received on consignment from Cynthia Company

 

Question 16

What is Sunland's correct ending inventory balance at December 31, 2022?

·         $680700

·         $567700

·         $690000

·         $867700

 

Question 17

Manufacturers usually classify inventory into all the following general categories except:

·         work in process.

·         finished goods.

·         merchandise inventory

·         raw materials.

 

Question 17

Which of the following items will increase inventoriable costs for the buyer of goods?

·         Purchase returns and allowances granted by the seller

·         Freight charges paid by the purchaser .

·         Purchase discounts taken by the purchaser

·         Freight charges paid by the seller

 

Question 18

Which of the following is not a common cost flow assumption used in costing inventory?

·         Average-cost

·         Middle-in, first-out

·         Last-in, first-out

·         First-in, first-out

 

Question 19

Cost of goods purchased is $540,000, ending inventory is $20,000, and cost of goods sold is $560,000. How much is beginning inventory?

·         $40,000

·         $20,000

·         $10,000

·         $0

 

Question 20

If the ending inventory is overstated, what occurs?

·         Assets are overstated and stockholders’ equity is overstated.

·         Assets are overstated and the net income is understated.

·         Assets are overstated and the liabilities are understated.

·         Assets are overstated and the cost of goods sold is overstated.