Multiple-Choice Questions
1. If beginning inventory is $40,000, purchases is $215,000, and ending inventory is $35,000, what is cost of goods sold as determined by the cost of goods sold model?
a. $140,000
b. $210,000
c. $220,000
d. $290,000
2. Which of the following transactions would not result in an entry to the inventory account in the buyer€™s accounting records under a perpetual inventory system?
a. The purchase of merchandise on credit.
b. The return of merchandise to the supplier.
c. The payment of a credit purchase of merchandise within the discount period.
d. The payment of freight by the seller for goods received from a supplier.
3. Briggs Company purchased $15,000 of inventory on credit with credit terms of 2/10, n/30. Briggs paid for the purchase within the discount period. How much did Briggs pay for the inventory?
a. $14,700
b. $14,850
c. $15,000
d. $15,300
4. Which of the following transactions would not result in an adjustment to the inventory account under a perpetual inventory system?
a. The sale of merchandise for cash.
b. The sale of merchandise on credit.
c. The receipt of payment from a customer within the discount period.
d. The return of merchandise by a customer.
5. U-Save Automotive Group purchased 10 vehicles during the current month. Two trucks were purchased for $20,000 each, two SUVs were purchased for $31,000 each, and six hybrid cars were purchased for $27,000 each. A review of the sales invoices revealed that five of the hybrid cars were sold and both trucks were sold. What is the cost of U-Save€™s ending inventory if it uses the specific identification method?
a. $89,000
b. $129,000
c. $135,000
d. $175,000
Use the following information for Multiple-Choice Exercises 6-6 through 6-7:
Morgan Inc. has the following units and costs for the month of April:

6. Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30?
a. $18,000
b. $22,300
c. $45,300
d. $49,600
7. Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of goods sold under LIFO at April 30?
a. $22,000
b. $22,300
c. $45,300
d. $45,600
8. When purchase prices are rising, which of the following statements is true?
a. LIFO produces a higher cost of goods sold than FIFO.
b. LIFO produces a higher cost for ending inventory than FIFO.
c. FIFO produces a lower amount for net income than LIFO.
d. Average cost produces a higher net income than FIFO or LIFO.

Transcribed Image Text:

Units Sold at Retail Beginning inventory, Apri Purchase 1, April 9 Sale 1, April 12 Purchase 2, April 22 Units Purchased at Cost 1,200 units at $23 800 units at $25 1,000 units at $20 2,100 units at $40