Kershaw Bookstore had 500 units on hand at January 1, costing SIS each the month
ID: 2548318 • Letter: K
Question
Kershaw Bookstore had 500 units on hand at January 1, costing SIS each the month of January were as follows 8. Purchases and sales during Date Jan. 14 Purshasss Sales 375 @$28 17 25 29 250 @ $20 250@$22 250@ 532 Kershaw does not maintain perpetual inventory records. According to a physical count, 375 units were on hand at January 31. The cost of the inventory at January 31, under the FIFO method is: a. $1,000. b. $6,750. c $7,750, d. $8,000 Which of the following expressions is incorrect? a. Gross profit-operating expenses net income b. Sales-cost of goods sold-operating expenses net income c. Net income operating expenses gross profi d. Operating expenses-cost of goods sold gross profit 9. 10. The ownership claim arising from the reinvestment of previous profits is called a. net assets b. stockholders' equity c. investment income d. retained earningsExplanation / Answer
SOLUTION
8. Cost of inventory at 31 January = $8,000.
Under FIFO inventory, beginning inventories are supposed to be sold first. So. ending inventory must be from the last purchases.
Cost of ending inventory =
= (125 units * $20) + (250 units * $22)
= $2,500 + $5,500
= $8,000
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