Chapter 6 Quiz
1.
Given the following data, what is the cost of goods sold?
Beginning inventory
$380,000
Ending inventory
340,000
Purchases
1,250,000
380,000+1,260,000-x = 340,000
a. $1,280,000
b. $1,300,000
c. $1,290,000
d. $1,210,000
Purchase discounts
Freight-in
10,000
20,000
B
2.
Given the following data, what is the cost of purchases?
Sales revenue
$725,000
Cost of goods sold
345,000
Ending inventory
250,000
Beginning inventory
120,000
120,000+x-345,000=250,000
a. $370,000
b. $465,000
c. $595,000
d. $475,000
D
3.
Using perpetual inventory, the entry to record a sale of goods would include a:
a.
b.
c.
d.
A
COGS
Credit to Inventory
Debit to Sales Revenue
Credit to Cost of Goods Sold
b. and c.
xx
INV
xx
(perpetual) constant (periodic) at end of the period
Use the information provided below to answer the next three questions:
Units
Beginning inventory 20
Purchase, 7/23
45
Purchase, 9/8
15
80
Units sold
42
4.
Cost/Unit
$10
12
14
How many units are left in ending inventory?
80-42= 38
Total
$200
540
210
5.
Using FIFO, the cost of the ending inventory is:
a.
b.
c.
d.
$534
$416
$464
$486
D
45-22=23
(23 X 12) + (15 X 14) = 486
6.
Assume all the units were sold at a price of $28 each.
Sales =$_____1176________
(28 X 42) = 1176
What is the average cost/unit? $__11.88____
Total cost / # of units
What is gross profit using the average cost method? $___677.04_________
REV-COGS=GP
7.
All of the following are reasons for choosing the LIFO versus the FIFO costing
method except:
a. LIFO reports the most up-to-date inventory values on the balance sheet
b. LIFO generally results in lower income taxes paid
c. LIFO uses more current costs in calculating cost of goods sold
d. LIFO is generally more conservative
8.
Data for Be-Dazzled Shop for the year ended are as follows:
A
Sales revenue
$200,000
Cost of goods sold
130,000
Beginning inventory 70,000
Ending inventory
60,000
COGS / AINV = INV turnover
130,000/ 65000 = 2
A INV = B INV + E INV / 2
70,000+60000 /2 = 65000
The inventory turnover is:
a. 2.17
c.
1.86
b. 2.00
d.
1.54
B
9.
If ending inventory for the year ended 12/31/16 is understated, this error will
cause stockholders’ equity to be:
a. overstated at the end of 2016 and understated at the end of 2017.
b. understated at the end of 2016 and overstated at the end of 2017.
c. overstated at the end of 2016 and correctly stated at the end of 2017.
d. understated at the end of 2016 and correctly stated at the end of 2017.
A
10.
The following data are for the Bi-Star Company for the year ended 12/31/16:
Beginning inventory
Net purchases
Net sales revenue
Gross profit percentage
$150,000
300,000
700,000
40%
What is the estimated ending inventory?
a. $350,000
c.
$170,000
b. $280,000
d.
$30,000
Use the following information for the next two questions:
Raines Software began January with $3,400 of merchandise inventory. During
January, Raines made the following entries for its inventory transactions:
Inventory
Accounts Payable
Accounts Receivable
Sales Revenue
Cost of Goods Sold
Inventory
$6,700
$6,700
$7,700
$7,700
$5,500
$5,500
11. How much did Raines have in ending inventory at the end of January?
A. $4,600
B. $6,700
C. $10,100
D. $0
A
B inv + Pur – COGS = Einv
12. What was Raines’ gross profit for January?
A. $5,500
B. $7,700
C. $2,200
D. $0
C 2,200 REV-COGS = GP
13. When does the cost of inventory become an expense?
A. When payment is made to the supplier
B. When inventory is purchased from the supplier
C. When cash is collected from the customer
D. When inventory is delivered to a customer
D
14. The following data come from the inventory records of Dean Company:
Net sales revenue:
Beginning inventory:
Ending inventory:
Net purchases:
$627,000
$61,000
$40,000
$430,000
Based on these facts, the gross profit for Dean Company is:
A.
B.
C.
D.
$197,000
$190,000
$176,000
$166,000