Question :
31.Northwest Fur Co. started 2016 with $94,000 of merchandise inventory : 1412708
31.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.
Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?
A.$492,500.
B.$496,500.
C.$490,500.
D.$492,550.
Beginning inventory$94,000
Inventory purchased400,000
Freight charges7,500
Merchandise returned(5,000)
Discounts [($400,000 – 5,000) x 1%)](3,950)
Cost of goods available for sale$492,550
32.Cinnamon Buns Co. (CBC) started 2016 with $52,000 of merchandise on hand. During 2016, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
Assuming CBC uses the gross method to record purchases, ending inventory would be:
A.$6,480.
B.$15,400.
C.$15,480.
D.$21,000.
Beginning inventory$52,000
Inventory purchased280,000
Freight9,000
Merchandise returned(4,000)
Discounts [($280,000 – 4,000) x 2%)](5,520)
Cost of goods available for sale$331,480
Cost of goods sold316,000
Ending inventory$ 15,480
33.Cinnamon Buns Co. (CBC) started 2016 with $52,000 of merchandise on hand. During 2016, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
What is cost of goods available for sale, assuming CBC uses the gross method?
A.$312,480.
B.$326,000.
C.$331,480.
D.$337,000.
Beginning inventory$52,000
Inventory purchased280,000
Freight9,000
Merchandise returned(4,000)
Discounts [($280,000 – 4,000) x 2%)](5,520)
Cost of goods available for sale$331,480
34.Cost of goods sold is given by:
A.Beginning inventory - net purchases + ending inventory.
B.Beginning inventory + accounts payable - net purchases.
C.Net purchases + ending inventory - beginning inventory.
D.Net Purchases + beginning inventory - ending inventory.
35.The LIFO Conformity Rule states that if LIFO is used for:
A.One class of inventory, it must be used for all classes of inventory.
B.Tax purposes, it must be used for financial reporting.
C.One company in an affiliated group, it must be used by all companies in an affiliated group.
D.Domestic companies, it must be used by foreign partners.
36.The largest expense on a retailer's income statement is typically:
A.Salaries and wages.
B.Cost of goods sold.
C.Income tax expense.
D.Depreciation expense.
37.In a perpetual average cost system:
A.A new weighted-average unit cost is calculated each time additional units are purchased.
B.The cost allocated to ending inventory is generally the same as it would be in a periodic inventory system.
C.The moving-average unit cost is determined following each sale.
D.The average is determined by dividing the total number of units sold by the cost of units purchased during the period.
38.In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:
A.Weighted average.
B.Moving average.
C.FIFO.
D.LIFO.
39.During periods when costs are rising and inventory quantities are stable, cost of goods sold will be:
A.Higher under FIFO than LIFO.
B.Higher under FIFO than average cost.
C.Lower under average cost than LIFO.
D.Lower under LIFO than FIFO.
40.During periods when costs are rising and inventory quantities are stable, ending inventory will be:
A.Higher under LIFO than FIFO.
B.Lower under average cost than LIFO.
C.Higher under average cost than FIFO.
D.Higher under FIFO than LIFO.
