Question

Question 3. Which inventory method was used to calculate cost of goods sold, based on the information above?

Purchased Units Unit Cost Total Cost $125 $9,375 $175 $21,000 $95 $9,500 $39,875 January 75 February 120 March 100 Units Available 295 for Sale Ending Inventory Units Sold in 250 April Units on Hand 45 Cost of Goods Sold: $35,600 Which inventory method was used to calculate cost of goods sold, based on the information above? O Weighted average O FIFO OLIFO O Specific ID

Question 5.

ABC Pipe Supply ordered inventory from a PVC pipe manufacturer. The terms of freight on the order acknowledgement specify that ABC Pipe Supply must take ownership of the order and pay the shipping costs when the order is loaded on the truck at the manufacturer's docks.

Which FOB terms will be stated on the order acknowledgement?

• FOB 2% 10, Net 30

• FOB In Transit

• FOB Destination

• FOB Shipping Point

Question 6 Using the FIFO method and the list of inventory above, which of the following is the Cost of Goods Sold during January?

Question 8

Which one of the businesses below would most likely use the FIFO method of inventory valuation?

• An art gallery

• A car dealership

• A grocery store

• A jewelry store

Question 15

Ann bought three sweaters online. Each of the sweaters was normally priced at $75. She received a sales discount for paying for her sweaters in full within 10 days. She ultimately paid $180 for all three.

Which discount percentage did she receive?

• 25%

• 20%

• 5%

• 10%

Answer 1

Answer is as follows:

3. FIFO

Given unts sold = 250, Cost of Goods Sold = $35600

when we use FIFO: (75 * $125) + (120 * $175) + (55 * $95 ) = $35,600

5. FOB Shipping Point

It implies that the buyer assumes the title in goods and owns the goods in transit and pays the freight charges.

Here it is clearly mentioned that ABC Pipe supply ( buyer ) must take the ownership of order and pays shipping costs, thus it implies it is FOB Shipping Point.

6. $212.50

Cost of Goods Sold using FIFO:

Units sold :75 = (50 * $3) + (25 * $2.5) = $212.50

8. A grocery store

Generally Stores doing business with perishable goods and having certain expiry period generally uses FIFO for inventory valuation.

15. 20 %

Cost for 3 = $75 *3 = $225

Paid for 3 = $180

Discount = 225 - 180 = $45

Discount percentage = (45 / 225)*100 = 20 %