Question

48. Review the following journal entry and provide the most likely explanation of what is happening to require this journal entry to be recorded: Supplies Expense Supplies S 150 S150 A) The company purchased supplies for later use. B) The company is recognizing the supplies purchased under the cash basis of accounting C) This is an adjusting journal entry to recognize the supplies used / consumed during the reporting period. USE THE FOLLOWING DATA SET TO ANSWER QUESTION #49 and 50 BJ Ine, made the following four inventory purchases in June: PerUnit Cost Total Cost June June 1 150 units 10 200 units 15 200 units 28 150 units 700 units S5.50 S5.60 $5.70 $5.90 S 825 1,120 1,140 885 $3.970 June A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Therefore, the company sold 450 units during the reporting period. 49. Using the ETEO inventory method, the dollar amount to push ont of inventory to Cost of Goods Sold on June 30 is: A) $3,085 B) $1,455 C) $1,755 D) $2,515 50. Using the FIFO inventory method, the amount allocated to ending inventory (rounded to the nearest dollar) on June 30 is: A) $1,385 B) $1,425 C) $1,455 D) $1,475

Answer 1

48. Option (C) is correct

This is an adjusting journal entry to recognize the supplies used / consumed during the reporting period. It shows that out of the total supplies available, $150 of the supplies were used during the reporting period.

49. Option (D) is correct

As per the first in first out (FIFO) method, the units that were purchased first are sold first. Means most earliest purchases are the first to be sold. The cost of 450 units sold were as under:

From June 1 purchase: 150 units @ $5.5 = $825

From June 10 purchase: 200 units @ $5.6 = $1120

From June 15 purchase: 100 units @ $5.7 = $570

Total cost of goods sold = $825 + $1120 + $570 = $2515

50. Option (C) is correct

As per the first in first out (FIFO) method, the units that were purchased first are sold first. Means most earliest purchases are the first to be sold. The cost of 250 units in ending inventory is:

From June 15 purchase: 100 units @ $5.7 = $570

From June 28 purchase: 150 units @$5.9 = $885

Total cost of ending inventory = $570 + $885 = $1455