If prices are rising, which inventory cost flow method will produce the lowest amount of cost of goods sold?

FIFO

Weighted average

LIFO

LIFO, FIFO, and the weighted-average inventory cost flow methods will all produce equal amounts of cost of goods sold.

1 points

QUESTION 7

West Corporation's Year 1 ending inventory was overstated by $20,000; however, ending inventory for Year 2 was correct. Which of the following statements is correct?

Cost of goods sold for Year 1 is overstated.

Net income for Year 1 is understated.

Cost of goods sold for Year 2 is overstated.

Retained earnings at the end of Year 2 is overstated.

1 points

QUESTION 8

Which of the following general journal entries would be used to recognize $7,500 of bad debts expense under the direct write-off method?

Bad debts expense 7,500

Allowance for doubtful accounts 7,500

Bad debts expense 7,500

Accounts receivable 7,500

Allowance for doubtful accounts 7,500

Bad debts expense 7,500

Accounts receivable 7,500

Bad debts expense 7,500

1 points

QUESTION 9

The following information relates to Halloran Co.'s accounts receivable for 2018:

Accounts receivable balance, 1/1/2018 $ 854,000

Credit sales for 2018 3,420,000

Accounts receivable written off during 2018 68,000

Collections from customers during 2018 2,970,000

Allowance for doubtful accounts balance, 12/31/2018 204,000

What amount should Halloran report for accounts receivable, before allowances, at December 31, 2018?

$1,304,000.

$1,236,000.

$1,032,000.

None of these answer choices are correct.

1 points

QUESTION 10

Hoover Company purchased two identical inventory items. The item purchased first cost $32.50. The item purchased second cost $36.00. Then Hoover sold one of the inventory items for $65. Based on this information, which of the following statements is true?

The cost of goods sold is $36.00 if Hoover uses the FIFO cost flow method.

The cost of goods sold is $32.50 if Hoover uses the LIFO cost flow method.

The gross margin is $30.75 if Hoover uses the weighted-average cost flow method.

The ending inventory is $36.00 if Hoover uses the LIFO cost flow method.