Question : 21.The inventory method that will always produce the same amount : 1412707

 

 

21.The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be: 
 
 

A.FIFO.

 

B.LIFO.

 

C.Weighted average.

 

D.None of these answer choices is correct.

 

 

 

 

22.The Mateo Corporation's inventory at December 31, 2016, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:

• Merchandise costing $30,000, shipped f.o.b. shipping point from a vendor on December 30, 2016, was received on January 5, 2017.
• Merchandise costing $22,000, shipped f.o.b. destination from a vendor on December 28, 2016, was received on January 3, 2017.
• Merchandise costing $38,000 was shipped to a customer f.o.b. destination on December 28, arrived at the customer's location on January 6, 2017.
• Merchandise costing $12,000 was being held on consignment by Traynor Company.

What amount should Mateo Corporation report as inventory in its December 31, 2016, balance sheet? 
 
 

A.$367,000.

 

B.$427,000.

 

C.$405,000.

 

D.$325,000.

$325,000 + 30,000 + 38,000 + 12,000 = 405,000

 

 

 

23.Ending inventory is equal to the cost of items on hand plus: 
 
 

A.Items in transit sold f.o.b. shipping point.

 

B.Purchases in transit f.o.b. destination.

 

C.Items in transit sold f.o.b. destination.

 

D.None of these answer choices is correct.

 

 

 

 

24.Purchases equal the invoice amount: 
 
 

A.Plus freight-in, plus discounts lost.

 

B.Less purchase returns, plus purchase allowances.

 

C.Plus freight-in, less purchase discounts.

 

D.Plus discounts, less purchase returns.

 

 

 

 

25.Using the gross method, purchase discounts lost are: 
 
 

A.Included in purchases.

 

B.Added to accounts payable.

 

C.Included in interest expense.

 

D.Deducted from discount income.

 

 

 

 

26.Under the net method, purchase discounts lost are: 
 
 

A.Included in purchases.

 

B.Added to accounts payable.

 

C.Included in interest expense.

 

D.Deducted from discount income.

 

 

 

 

27.Inventory does not include: 
 
 

A.Materials used in the production of goods to be sold.

 

B.Assets intended to be sold in the normal course of business.

 

C.The cost of office equipment.

 

D.Assets currently in production for normal sales.

 

 

 

 

28.Under the gross method, purchase discounts taken are: 
 
 

A.Deducted from interest expense.

 

B.Added to net purchases.

 

C.Added to interest income.

 

D.Deducted from purchases.

 

 

 

 

29.Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list price amount of $6,000 and payment terms of 2/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at: 
 
 

A.$5,940.

 

B.$5,880.

 

C.$6,000.

 

D.$6,120.

$6,000 × 98% = $5,880

 

 

 

30.Northwest Fur Co. started 2016 with $94,000 of merchandise inventory on hand. During 2016, $400,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $7,500. Merchandise with an invoice amount of $5,000 was returned for credit. Cost of goods sold for the year was $380,000. Northwest uses a perpetual inventory system.

What is ending inventory assuming Northwest uses the gross method to record purchases?  
 
 

A.$112,490.

 

B.$112,550.

 

C.$116,500.

 

D.$120,300.

 

Beginning inventory$94,000

Inventory purchased400,000

Freight7,500

Merchandise returned(5,000)

Discounts [($400,000 – 5,000) x 1%)](3,950)

Cost of goods available for sale$492,550

Cost of goods sold380,000

Ending inventory$112,550