Use the following to answer question 15: Transactions for the month of June were

Question

Use the following to answer question 15: Transactions for the month of June were: Purchases Sales June (balance) 3,200 a June 2 2,400 a $5.50 S3.20 8,800 a 3.10 4,800 a 3.30 7,200 a 3.40 2,000 a 3.50 6 6,400 a 5.50 9 4,000 a 5.50 10 1,600 a 6.00 18 5,600 a 6.00 25 800 a 6.00 15 15. Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is A) $16,440 B) S16,640. C) S17,160. D) $17,880. 16. Net realizable value is A) acquisition cost plus costs to complete and sell. B) selling price. C) selling price plus costs to complete and sell D) selling price less costs to complete, sell, and transport Page 7 200000 000 21@ 0000

Explanation / Answer

Answer 15

Ending Inventory on FIFO basis (perpectual method)

800 * $3.20 =2,560

5,600 * $3.10 = 17,360

9,920 + 15,840 = 25,760

3,200 *$3.10=$9,920

800 * $3.30 = $2,640

2,400 * $3.3 = $7,920

3,200 *$3.4 = $10,880

Answer : The required ending inventory is $17,880 (option D)

Answer 16

Net Realizable value is D) Selling price less cost to complete sell and transprt .

Explanation : NRV is the estimated selling price in the ordinary course of business minus cost of completion , disposal & transportation

Date June Purchase COGS Balance ($) 1 3,200 * $3.20 = $10,240 - 10,240 2 - 2,400 * $3.20 = $7,680 10,240 -  7,680 = 2,560 3 8,800 * $3.10 = $27,280 - 2,560 + 27,280 = 29,840 6

800 * $3.20 =2,560

5,600 * $3.10 = 17,360

29,840 - 2,560 - 17,360 = 9,920 7 4,800 * $3.30 = $15,840 -

9,920 + 15,840 = 25,760

9

3,200 *$3.10=$9,920

800 * $3.30 = $2,640

25,760 - 9,920 - 2,640 = 13,200 10 16,00 * $3.30 = $5,280 13,200 - 5,280 = 7,920 15 7,200 *$3.4 = $24,480 7,920+24,480 = 32,400 18

2,400 * $3.3 = $7,920

3,200 *$3.4 = $10,880

32,400 - 7,920 - 10,880 = 13,600 22 2,000 *$3.5 = $7,000 13,600 + 7,000 = 20,600 25 800 * $3.4 = 2,720 20,600 - 2,720 = 17,880

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