Question 1 Which of the following methods is appropriate for a

the following questions.

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Date
Product Z
Units
Cost
May 3
Purchase
5
$30
May 10
Sale
3

May 17
Purchase
10
$34
May 20
Sale
6

May 23
Sale
3

May 30
Purchase
10
$40

Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the FIFO inventory cost method.
Answer

$250

$180

$196

$204
2 points
Question 6

Use the following information to answer the following questions.

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Date
Product Z
Units
Cost
May 3
Purchase
5
$30
May 10
Sale
3

May 17
Purchase
10
$34
May 20
Sale
6

May 23
Sale
3

May 30
Purchase
10
$40

Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.
Answer

$494

$502

$422

$520
2 points
Question 7

Use the following information to answer the following questions.

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Date
Product Z
Units
Cost
May 3
Purchase
5
$30
May 10
Sale
3

May 17
Purchase
10
$34
May 20
Sale
6

May 23
Sale
3

May 30
Purchase
10
$40

Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.
Answer

$78

$90

$102

$180
2 points
Question 8

Too much inventory on hand
Answer

reduces solvency

increases the cost to safeguard the assets

increases the losses due to price declines

all of the above
2 points
Question 9

The inventory costing method that reports the most current prices in ending inventory is
Answer

FIFO

Specific identification

LIFO

Average cost
2 points
Question 10

The inventory costing method that reports the earliest costs in ending inventory is
Answer

FIFO

LIFO

Average cost

Specific identification
2 points
Question 11

Taking a physical count of inventory
Answer

is not necessary when a periodic inventory system is used

should be dine near year-end

has no internal control relevance

is not necessary when a perpetual inventory system is used
2 points
Question 12

Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?
Answer

net income is understated

net income is overstated

cost of merchandise sold is understated

merchandise inventory reported on the balance sheet is overstated
2 points
Question 13

Kristin’s Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory?
Answer

Merchandise purchased FOB shipping point was picked up by the freight company but had still not arrived at Kristin’s Boutique as of December 31, 2010.

Kristin has in its warehouse merchandise on consignment from Abby Co.

Kristin has sent merchandise to various retailers on a consignment basis.

Kristin has merchandise on hand which has been returned by customers because of wrong size.
2 points
Question 14

If the cost of an item of inventory is $50 and the current replacement cost is $57, the amount included in inventory according to the lower of cost or market is
Answer

$7

$50

$57

$107
2 points
Question 15

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?
Answer

average cost

LIFO

FIFO

weighted average
2 points …