TOPIC 8 ACCOUNTING FOR INVENTORIES

In a manufacturing business, inventory that is ready for sale is called

• raw materials inventory.

• work in process inventory.

• finished goods inventory.

• store supplies inventory.

Bud's Place recorded the following data:

Date Units Cost

1/1 Inventory 500 $2.40

1/8 Purchased 1,000 3.00

1/12 Sold 1,200

The weighted average unit cost of the inventory at January 31 is:

• $2.40.

• $2.70.

• $2.80.

• $3.402.

Beginning inventory plus the cost of goods purchased equals

• cost of goods sold.

• cost of goods available for sale.

• net purchases.

• total goods purchased.

Cost of goods sold is computed from the following equation:

• beginning inventory – cost of goods purchased + ending inventory.

• sales – cost of goods purchased + beginning inventory – ending inventory.

• sales + gross profit – ending inventory + beginning inventory.

• beginning inventory + cost of goods purchased – ending inventory.

The LIFO inventory method assumes that the cost of the latest units purchased are

• the last to be allocated to cost of goods sold.

• the first to be allocated to ending inventory.

• the first to be allocated to cost of goods sold.

• not allocated to cost of goods sold or ending inventory.

A company purchased inventory as follows:

150 units at $6

350 units at $7

The average unit cost for inventory is

• $6.00.

• $6.50.

• $6.70.

• $7.00.

Elly Company uses a periodic inventory system. Details for the inventory account for the month of January, 2020 are as follows:

Units Per unit price Total

Balance, 1/1/20 200 $5.00 $1,000

Purchase, 1/15/20 100 5.30 530

Purchase, 1/28/20 100 5.50 550

An end of the month (1/31/20) inventory showed that 150 units were on hand. How many units did the company sell during January, 2020?

• 50

• 150

• 200

• 250

Elly Company uses a periodic inventory system. Details for the inventory account for the month of January, 2020 are as follows:

Units Per unit price Total

Balance, 1/1/20 200 $5.00 $1,000

Purchase, 1/15/20 100 5.30 530

Purchase, 1/28/20 100 5.50 550

An end of the month (1/31/20) inventory showed that 150 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

• $750

• $805

• $850

• $815

Elly Company uses a periodic inventory system. Details for the inventory account for the month of January, 2020 are as follows:

Units Per unit price Total

Balance, 1/1/20 200 $5.00 $1,000

Purchase, 1/15/20 100 5.30 530

Purchase, 1/28/20 100 5.50 550

An end of the month (1/31/20) inventory showed that 150 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

• $750

• $805

• $850

• $815

Pasquale has the following inventory information.

July 1 Beginning Inventory 20 units at $19 $ 380

7 Purchases 70 units at $20 1,400

22 Purchases 10 units at $24 240

$2,020

A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the average-cost method, the value of ending inventory is

• $585.

• $606.

• $630

• $660.