Multiple-Choice Questions

1. If beginning inventory is $50,000, purchases is $260,000, and ending inventory is $35,000, what is cost of goods sold as determined by the cost of goods sold model?

a. $175,000

b. $245,000

c. $275,000

d. $345,000

2. Which of the following transactions would not result in an entry to the merchandise inventory account in the buyer’s accounting records under a perpetual inventory system?

a. The purchase of merchandise on credit.

b. The payment of freight by the seller for goods received from a supplier.

c. The return of merchandise to the supplier.

d. The payment of a credit purchase of merchandise within the discount period.

3. Briggs Company purchased $10,000 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. $9,000

b. $9,800

c. $10,000

d. $10,200

4. Which of the following transactions would not result in an adjustment to the Merchandise Inventory account under a perpetual inventory system?

a. The sale of merchandise for cash.

b. The sale of merchandise on credit.

c. The return of merchandise by a customer.

d. The receipt of payment from a customer within the discount period.

5. U-Save Automotive Group purchased 10 vehicles during the current month. Two trucks were purchased for $18,000, two SUVs were purchased for $22,000, and six hybrid cars were purchased for $31,000. 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. $75,000

b. $89,100

c. $93,000

d. $222,000

6. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30?
a. $24,600
b. $29,200
c. $38,400
d. $43,000

7. If Morgan uses a perpetual inventory system, what is the cost of goods sold under LIFO at April 30?
a. $28,000
b. $29,200
c. $38,400
d. $39,600

8. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under average cost at April 30? (Use four decimal places for per unit calculations and round all other numbers to the nearest dollar.)
a. $27,040
b. $28,655
c. $38,945
d. $40,560

9. When purchase prices are rising, which of the following statements is true?
a. LIFO produces a higher cost for ending inventory than FIFO.
b. FIFO produces a lower amount for net income than LIFO.
c. LIFO produces a higher cost of goods sold than FIFO.
d. Average cost produces a higher net income than FIFO orLIFO.

Transcribed Image Text:

The following information is used for Multiple-Choice Exercises6-6 through 6-8 Morgan Inc. has the following units and costs for the month of April: Units Purchased at Cost Units Sold at Retail Beginning Inventory, Apri Purchase 1, April 9 Sale 1, April 12 Purchase 2, April 22 1,000 units at $20 1,200 units at $23 1,800 units at $40 800 units at $25