40-41 Use the following information to answer questions PLEC Inc. uses th e aver
ID: 2411415 • Letter: 4
Question
40-41 Use the following information to answer questions PLEC Inc. uses th e average cost formula in a periodic inventory system. ent for presentation (Use unrounded numbers in your calculations but round to the nearest purposes in your answer.) Jun I Beginning inventory 20 units @ $19.00 per unit Jun 5 Purchase Jun 8 Sale Jun 9 Purchase Jun 10 Sale Jun 22 Sale 100 units @ $22.00 per unit 70 units 80 units @ 22.31 per unit 25 units 40 units 40. The cost of goods sold for the month of June is? (a) $4364.80 (b) $3984.80 (c) $2048.80 (d) $2946.24. 41. Ending inventory at the end of June is? (a) $1784.80. (b) $1418.56 (c) $1527.68 (d) $ 3080.00 42. Stylish Shoe Store reported beginning merchandise inventory of $15,000. During the period, purchases were $70,000; purchase returns, $2.000; and freight in $5,000. A physical count of inventory at the end of the period revealed that $10,000 was still on hand. The cost of goods available for sale was (a) $78,000 (b) $82,000. (c) $88,000 (d) $92,000.Explanation / Answer
Answer to Question No. 40
Option d i.e. $2,946.24
Cost of Goods available for Sales = Beginning Inventory + Cost of Purchases
Beginning Inventory = 20 units * $19.00 = $380
Cost of Purchases = (100 units * $22.00) + (80 units * $22.31)
Cost of Purchases = $2,200 + $1,784.80
Cost of Purchases = $3,984.80
Cost of Goods available for Sales = $380.00 + $3,984.80
Cost of Goods available for Sales = $4,364.80
Units available for Sale = 20 units + 100 units + 80 units = 200 units
Average Cost = 4,364.80 / 200
Average Cost = $21.824
Units Sold = 70 units + 25 units + 40 units = 135 units
Cost of Goods Sold = 135 units * $21.824
Cost of Goods Sold = $2,946.24
Answer to Question No. 41
Option b i.e. $1,418.56
Ending Inventory = Cost of Goods available for Sales – Cost of Goods sold
Ending Inventory = $4,364.80 - $2,946.24
Ending Inventory = $1,418.56
Answer to Question No. 42
Option c i.e. $88,000
Cost of Goods available for Sales = Beginning Inventory + Cost of Purchases
Beginning Inventory = $15,000
Cost of Purchases = Purchases + Freight In – Purchases Returns
Cost of Purchases = $70,000 + $5,000 - $2,000
Cost of Purchases = $73,000
Cost of Goods available for Sales = $15,000 + $73,000
Cost of Goods available for Sales = $88,000
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