Question

31) Inventory records for Dunbar Incorporated revealed the following Number of Units Transaction Unit Cost 500 Beginning inventory Purchas Apr. 20 400 Dunbar sold 700 units of inventory during the month. Ending inventory assuming FIFO would be: A) 5500. B) $480. C) $490. D) $470. 32) At the end of the year, Mark Inc. estimates future bad debts to be $6,500. The Allowance for Uncollectible Accounts has a credit balance of $2.500 before any year-end adjustment. What adjustment should Mark Inc, record for the estimated bad debts at the end of the year? A) Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts S4,000. B) Debit Bad Debt Expense, $6,500; credit Allowance for Uncollectible Accounts, $6,500. C) Debit Bad Debt Expense, 59,000; credit Allowance for Uncollectible Accounts, $9,000. D) Debit Allowance for Uncollectible Accounts, 9,000; credit Bad Debt Expense, 59,000. 33) Which of the following is true regarding LIFO and FIFO? A) In a period of decreasing costs, LIFO results in lower net income than FIFO. B) The amount reported for COGS is based on net realizable value of inventory if LIFO is used. C) In a period of decreasing costs, LIFO results in lower total assets than FIFO D) In a period of rising costs, LIFO results in lower net income than FIFO. 34) The following information relates to inventory for Shoeless Joe Inc. Quantity Price Date March 1 March 7 March 11 March 12 Beginning Inventory Purchase Sale Purchase 15 30 15 At what amount would Shoeless report cost of goods sold using the weighted average cost to assumption? (Round your answer to the nearest dollar) A) $105. B) $70. C) $73. D) $110.

Answer 1

31) Answer: A) $500 Workings: FIFO Method Ending Inventory = Beginning Inventory + Purchase - Sales = 500 + 400 - 700 200 units Ending inventory cost = 200 units * $2.50 $500 32) Answer: A) Debit Bad Debt Expense, $4,000; credit Allowance for Uncollectible Accounts $4,000 Workings: Bad debt expense = Estimated future bad debts - credit balance of Allowance for Uncollectible Accounts = $6,500 - $2,500 $4.000 33) Answer: D) In a period of rising costs, LIFO results in lower net income than FIFO 34) Answer: A) $105 Workings: Beginning inventory Purchase Purchase Quantity 20 15 price $2 $3 S6 Cost $40 $45 $90 $175 15 Total Weighted average price = Total cost /Total quantity $175 / 50 $3.50 Cost of goods sold = $3.50 * 30 $105