Axme uses a weighted average perpetual inventory system

Axme uses a weighted average perpetual inventory system.

August 2, 10 units were purchased at $12 per unit.

August 18, 15 units were purchased at $15 per unit.

August 29, 20 units were sold.

August 31, 14 units were purchased at $16 per unit.

What is the per-unit value of ending inventory on August 31?

A) $12.00.

B) $13.80.

C) $15.42.

D) $16.00.

E) $17.74.

F) * $345/25 units = $13.80/unit

G) **$293/19 units = $15.42/unit

2.

Gotham Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:

The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Gotham was the consignor.

The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company’s supervisors and managers during the coming year.

The ending inventory balance of $412,000 did not include goods costing $48,000 that were purchased by Gotham on December 28 and shipped FOB destination on that date. Gotham did not receive the goods until January 2 of the following year.

The ending inventory balance of $412,000 included damaged goods at their original cost of $38,000. The net realizable value of the damaged goods was $10,000.

The ending inventory balance of $412,000 included $43,000 of consigned inventory for which Gotham was the consignee.

Based on this information, the correct balance for ending inventory on December 31 is:

A) $247,000

B) $341,000

C) $362,000

D) $309,000

E) $319,000

3.

Generally accepted accounting principles require that the inventory of a company be reported at:

A) Market value.

B) Historical cost.

C) Lower of cost or market.

D) Replacement cost.

E) Retail value.

4.

Management decisions in accounting for inventory cost include all of the following except:

A) Costing method.

B) Inventory system (perpetual or periodic).

C) Customer demand for inventory.

D) Use of market values or other estimates.

E) Items included in inventory and their costs.

5.

Goods in transit are included in a purchaser’s inventory:

A) At any time during transit.

B) When the purchaser is responsible for paying freight charges.

C) When the supplier is responsible for freight charges.

D) If the goods are shipped FOB destination.

E) After the half-way point between the buyer and seller.

6.

A company that has operated with a 30% average gross profit ratio for a number of years had $100,000 in sales during the first quarter of this year. If it began the quarter with $18,000 of inventory at cost and purchased $72,000 of inventory during the quarter, its estimated ending inventory by the gross profit method is:

A) $30,000.

B) $21,000.

C) $20,000.

D) $18,000.

E) $27,000.

7.

Perch Company reported the following purchases and sales for its only product. Perch uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.

Date Activities Units Acquired at cost Units sold

May 1 Beginning inventory 150 units @ $ 10.00?

5 Purchases 220 units @ $ 12.00

10 Sales 140 units @ $ 20.00

15 Purchases 100 units @ $ 13.00

24 Sales 150 units @ $ 21.00

A) $2,260

B) $3,180

C) $1,860

D) $3,580

E) $2,100

8.

The inventory valuation method that tends to smooth out erratic changes in costs is:

A) FIFO.

B) Weighted average.

C) LIFO.

D) Specific identification.

E) WIFO.

9.

The inventory turnover ratio is calculated as:

A) Cost of goods sold divided by average merchandise inventory.

B) Sales divided by cost of goods sold.

C) Ending inventory divided by cost of goods sold.

D) Cost of goods sold divided by ending inventory.

E) Cost of goods sold divided by ending inventory times 365.

10.

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

A) LIFO method.

B) FIFO method.

C) Specific identification method.

D) Weighted average method.

E) Retail method.

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