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Kemp Clothing has cost of goods sold of $14,000 with beginning and ending inventories of $4,000 and $2,000, respectively. Purchases during the period are

Kemp Clothing has cost of goods sold of $14,000 with beginning and ending inventories of $4,000 and $2,000, respectively. Purchases during the period are:

a.$ 8,000.

b.$ 9,000.

c.$10,000.

d.$11,000.

e.$12,000.

12.Which one of the following expenditures should not be included in the cost of inventory?

a.Purchase cost

b.Transportation-in

c.Packaging cost

d.Capitalized equipment cost

13.Mars Hardware sold 20 drills for $8 each. Each drill cost $4. Which journal entry is required at the time of sale under a perpetual inventory system?

a.

Cash

160

 

 

Sales

 

160

 

b.

Cash

160

 

 

Inventory

 

160

 

c.

Cash

160

 

 

Cost of Goods Sold

80

 

 

Sales

 

160

 

Inventory

 

80

 

d.

Cash

160

 

 

Inventory

 

80

 

Gain from Sale

 

80

       

14.Wood Inc.sells automobiles at $6,000 above its costs and uses the specific identification method for inventory.  Below are the cars and the costs Wood paid for the inventory before the sale.

Auto 1: $35,000

Auto 2: $17,500

Auto 3: $19,500

Auto 4: $23,000

Auto 5: $26,000

If Wood sells Auto 3 and Auto 5 for cash, which of the following would be included in the journal entries it uses to record the sale and recognize the cost of the inventory?

  1.      A debit to Cost of Goods Sold for $45,500.
  2.      A credit to Sales for $45,500.
  3.       A credit to Inventory for $57,500.
  4.      A credit to Sales for $12,000.

15.Vic’s Produce purchased 50 boxes of tomatoes for a total of $400. It paid $20 for shipping tomatoes to a customer and $15 for repackaging them into smaller boxes. The cost of these tomatoes is:

a.$400.

b.$420.

c.$415.

d.$435.

16.SimonCereal purchased 100 pounds of cornflakes for $100. Transportation cost to Simon’s production facility was $25 for the barrel of cornflakes shipped FOB destination. Simon paid $60 for 100 one-pound biodegradable plastic bags into which the cornflakes were placed. The cost of each one-pound bag of cornflakes is:

a.$1.00.

b.$1.25.

c.$1.60.

d.$1.75.

17.Beginning inventory is valued at $7,000, purchases are $15,000 and ending inventory is valued at $9,000. Cost of goods sold is:

a.$23,000.

b.$16,000.

c.$30,000.

d.$13,000.

e.$16,000.

18.Victoria Fashions Clothing Store uses the perpetual method of accounting for inventory. During the current year, purchases are $30,000 and cost of goods sold is $25,000. Beginning inventory is valued at $4,000 and ending inventory was taken on December 31 and valued at $6,000. Inventory shortage expense for the current year is:

a.$0.

b.$2,000.

c.$3,000.

d.$5,000.

19.During a year of decreasing prices and decreasing inventory, which cost flow assumption would measure the greatest net income?

a.FIFO

b.LIFO

c.Averaging

d.Both a and c are correct.

20.During a year of rising prices and increasing inventory, which cost flow assumption would yield the greatest current ratio?

a.Averaging

b.LIFO

c.FIFO

d.Both a and c are correct.

Jan 25 2020 View more View Less

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