QUESTION 25 Flynn Company uses a perpetual inventory system and reported $1,000,
ID: 2548081 • Letter: Q
Question
QUESTION 25 Flynn Company uses a perpetual inventory system and reported $1,000,000 of inventory at the beginning of the month based on a physical count of inventory. During the month, the company bought $108,000 of inventory and sold inventory that had cost $59,500. At the end of the month, the physical count of inventory shows $1,030,000 on hand. How much shrinkage occurred during the month? $18,500 $78,000 $41,000 $30,000 QUESTION 26 Sinmans Co uses a periodic inventory system. The parchases of a particular product during the year are shown below Jan. 1 Apr. 18 Ang. 11 Oct. 23 600 units 500 units @ 700 units 200 units 8.00 $10.00 $12.00 $14.00 Beginning inventory The number of units sold during the year at S20 each were 1,200 Compute the cost of the ending inventory based on the average-cost method of inventory valuation. A. $12,600 B.$8,000 C.$10,000 Ds8.400 QUESTION 27 Sirmans Co. uses a periodic inventory system. The purchases of a particular product during the year are shown below: S 8.00 $10.00 $12.00 $14.00 Beginning inventory Jan. 1 Apr. 18 Aug. 11 Oct. 23 600 units 500 units@ 700 units 200 units The number of units sold during the year at S20 each were 1.200. Compute the cost of goods sold for the current year based on the LIFO method of inventory valuation. A s6,800 B. $10,000 C.$11,000 D $14,200 QUESTION 28 Sirmans Co. uses a periodic inventory system. The purchases of a particular product during the year are shown below: Jan. Apr. 18 Aug. 11 600 unitsa 500 units @ 700 units @ 200 units a Beginning inventory.. 8.00 $10.00 $12.00 $14.00 Oct. 23 Purchase The number of units sold during the year at S20 each were 1,200. Compute the gross margin for the current year based on the FIFO method of inventory valuation. A s9,800 B. $17,200 C.$13,000 D. $12,000Explanation / Answer
Answer
Answer is $18500 – Option ‘A’
A
Beginning Inventory
$1000000
B
Purchased inventory
$108000
C
Sold Inventory
$59500
D=A+B-C
Ending Inventory that should have been
$1048500
E
Actual Ending Inventory
$1030000
F=D-E
Shrinkage that had occurred
$18500
Working
Average Method
Cost of Goods available for sale
Cost of Goods Sold
Ending Inventory
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Units
Cost/unit
Ending inventory
Beginning Inventory
600
8
4800
Purchases:
Apr-18
500
10
5000
Aug-11
700
12
8400
Oct-25
200
14
2800
0
TOTAL
2000
10.5
21000
1200
$10.5
$12600
800
$10.5
$8400
Ending Inventory = 800 units @ $10.5 = $8400
Hence the answer is Option – D $8400
Working
LIFO
Cost of Goods available for sale
Cost of Goods Sold
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Beginning Inventory
600
8
4800
8
0
Purchases:
Apr-18
500
10
5000
300
10
3000
Aug-11
700
12
8400
700
12
8400
Oct-25
200
14
2800
200
14
2800
0
0
0
0
TOTAL
2000
21000
1200
$14200
Hence, the answer is Option – D $14200
Working for Cost of Goods Sold first
FIFO
Cost of Goods available for sale
Cost of Goods Sold
Units
Cost/unit
COG for sale
Units sold
Cost/unit
COGS
Beginning Inventory
600
8
4800
600
8
4800
Purchases:
Apr-18
500
10
5000
500
10
5000
Aug-11
700
12
8400
100
12
1200
Oct-25
200
14
2800
14
0
0
0
0
TOTAL
2000
21000
1200
$11000
Calculation of Gross Margin = Sales – Cost of Goods Sold
Sales
Units
Rate
Amount
Total
1200
20
24000
0
0
0
Total
1200
24000
(-) CoGS
1200
11000
Gross Profit
$13000
Hence, the correct answer is Option – C $13,000
A
Beginning Inventory
$1000000
B
Purchased inventory
$108000
C
Sold Inventory
$59500
D=A+B-C
Ending Inventory that should have been
$1048500
E
Actual Ending Inventory
$1030000
F=D-E
Shrinkage that had occurred
$18500
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