Gia02 tb chapter 10 - Intermediate Accounting 2E - Gordon - TB PDF

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Intermediate Accounting, 2e Chapter 10 Operating Assets: Inventory 10 Types of Inventory and Inventory Systems 1) A perpetual inventory system always provides current information about inventory levels. Answer: TRUE Diff: 1 Var: 1 Objective: 10 GAAP AACSB: Application of knowledge 2) A periodic inve...

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Intermediate Accounting, 2e (Gordon/Raedy/Sannella) Chapter 10 Short-Term Operating Assets: Inventory 10.1 Types of Inventory and Inventory Systems 1 )Aper pet uali nve nt or ys ys t e ma l wa yspr ovi de sc ur r e nti nf or mat i ona bouti nve nt or yl e ve l s . Ans we r :TRUE Di ff: 1 Var : 1 Obj ec t i ve :10. 1 I FRS/GAAP:GAAP AACSB:Appl i c at i onofknowl edge

2 )Ape r i odi ci nve nt or ys ys t em i sus e dbymos tc ompani est oda yduet ot hepr ol i f e r a t i onofc omput e r s . Ans we r :F ALSE Di ff: 1 Var : 1 Obj ec t i ve :10. 1 I FRS/GAAP:GAAP AACSB:Appl i c at i onofknowl edge

3 )Be gi nni ngi nve nt or y+NetPur c has e s=Cos tofGoodsSol d. Ans we r :F ALSE Di ff: 1 Var : 1 Obj ec t i ve :10. 1 I FRS/GAAP:GAAP AACSB:Appl i c at i onofknowl edge

4 )Thewor ki npr oc es si nve nt or yi sf oundont hebooksofamer c handi s i ngc onc er n. Ans we r :F ALSE Di ff: 1 Var : 1 Obj ec t i ve :10. 1 I FRS/GAAP:GAAP AACSB:Appl i c at i onofknowl edge

5 )Theflo w ofama nuf ac t ur er ' spr oduc tc os t st hr ought hei nve nt or yac c ount si s___ __ ___ . A)Wor ki nPr oc e s sI nve nt or y ,Cos tofGoodsSol d,a ndFi ni s he dGoodsI nv ent or y B)Ra w Ma t e r i a l sI nvent or y ,Cos tofGoodsSol d, andFi ni s he dGoodsI nve nt or y C)Ra w Ma t e r i al sI n ve nt or y , Fi ni s he dGoodsI nve nt or y ,andWor ki nPr oc es sI nve nt or y D)Ra w Ma t er i a l sI nve nt or y , Wor ki nPr oc e s sI nv ent or y ,a ndFi ni s he dGoodsI nvent or y Ans we r :D Di ff: 1 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

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6 )Fi r msus i ngt hepe r i odi ci nvent or ys ys t em r e c or dpur c ha s esofi nve nt or ywi t ha___ ___ __ . A)c r edi tt oPur c has es B)de bi tt oPur c ha s e s C)de bi tt oI nve nt or y D)c r edi tt oI nve nt or y Ans we r :B Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

7 )Whi c hs t at e me nti sno tc or r e c taboutper pet ua li nvent or ys ys t e ms ? A)Thebal a nc ei nt heI nve nt or yac c ounti sa l wa ysupt oda t e . B)Aphys i c ali nvent or yc ounti snotr e qui r ed. C)Cur r e nti nf or ma t i oni sa vai l abl ef orc os tofgoodss ol d. D)TheI nvent or yac c ounti supda t edf ore ac hpur c ha s ea nds al e . Ans we r :B Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

8 )Cha r l e sCompa ny' sbal a nc es hee tr epor t sRa w Ma t er i al sI nve nt or y ,$ 570 , 0 00 ;Fi ni s he dGoods I nvent or y ,$ 69 5, 000 ;a ndt ot ali nvent or i e sa t$ 1, 90 1, 000 .Wha ti st heva l ueofWor ki nPr oc e s sI nve nt or y? A)$1, 77 6, 00 0 B)$1 , 3 31 , 0 00 C)$63 6, 00 0 D)$1 , 206 , 0 00 Ans we r :C Expl a na t i on:$1 , 901 , 0 00-$ 570 , 0 00-$6 95, 00 0=$ 63 6, 000 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

9 )Ri c ha r dCompany' sfina nc i alr ec or dsr e por tbe gi nni ngi nve nt or yof$5 35 , 0 00; e ndi ngi nvent or yof $ 69 7, 000 ;a ndc os tofgoodss ol dof$1 , 3 96, 0 00. Wha ti st heamountofpur c ha s e s ? A)$1, 55 8, 00 0 B)$2 , 0 93 , 0 00 C)$1, 23 2, 00 0 D)$8 61 , 0 00 Ans we r :A Expl a na t i on:$1 , 396 , 0 00+$6 97, 00 0-$ 53 5, 000=$1, 558 , 0 00 Cos tofGoodsSol d$ 1, 39 6, 00 0+Endi ngI nvent or y$6 97, 00 0=Cos tofGoodsAvai l a bl ef orSa l e$ 2, 09 3, 000 Cos tofGoodsAvai l abl ef orSa l e$2, 09 3, 00 0-Be gi nni ngI nve nt or y$ 53 5, 000=$1 , 5 58 , 0 00Pur c has e s Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 0)De s t i nyI ndus t r i e sr epor t sbegi nni ngi nve nt or yof$25 4, 00 0,pur c ha s esof$55 9, 00 0,a nde ndi ng i nvent or yof$1 98 , 0 00. Wha ti st hec os tofgoodss ol d? A)$81 3, 00 0 B)$5 03, 0 00 C)$61 5, 00 0 D)$1 , 011 , 0 00 Ans we r :C 2 Copyr i ght©2019Pe ar s onEduc a t i on, I nc .

Expl a na t i on:Be gi nni ngI nve nt or y$ 25 4, 000+Pur c has es$5 59, 0 00=Cos tofGoodsAvai l abl ef orSa l e $ 81 3, 000 Cos tofGoodsAva i l abl ef orSa l e$8 13, 00 0-Endi ngI nve nt or y$ 198 , 0 00=Cos tofGoodsS ol d$ 615 , 0 00 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 1)Donal ds onCor por a t i onus esape r i odi ci nve nt or ys ys t em.OnJ a nua r y1 ,i nve nt or yi s$25 3, 00 0.On Apr i l5,Dona l ds ons e l l si nvent or ywi t has e l l i ngpr i c eof$75 , 0 00ona c c ount .Thec os toft hei nve nt or y s ol di s$ 50, 00 0.Thej our nale nt r y( ent r i es )t or ec or dt hes a l ei s( ar e)_ ___ __ __. A)de bi tCas ha ndc r edi tSal esRe ve nue B)de bi tAc c ount sRe c e i vabl eandc r e di tSal esRe ve nue ;de bi tCos tofGoodsSol dandc r e di tI nvent or y C)de bi tCas ha ndCos tofGoodsSol da ndc r edi tSa l esRe ve nuea ndI nvent or y D)de bi tAc c ount sRe c ei va bl eandc r edi tSa l esRe venue Ans we r :D Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 2)Dombr os eCompanyus esape r pet ua li nvent or ys ys t e m.OnJ anua r y1, i nvent or yi s$ 25 3, 000 .On Apr i l5,Dombr os es e l l si nvent or ywi t has e l l i ngpr i c eof$ 75 , 0 00onac c ount .Thec os toft hei nve nt or y s ol di s$ 50, 00 0.Thej our nale nt r y( ent r i es )t or ec or dt hes a l ei s( ar e)_ ___ __ __. A)de bi tCas ha ndCos tofGoodsSol da ndc r e di tSal e sRe venuea ndI nvent or y B)de bi tAc c ount sRe c e i vabl eandc r e di tSal esRe ve nue ;de bi tCos tofGoodsSol dandc r e di tI nvent or y C)de bi tAc c ount sRe c ei va bl eandc r e di tSa l esRe ve nue D)de bi tCa s handc r e di tS al e sRe ve nue Ans we r :B Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

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1 3)ThePe ggyAhl e r sCompa nyus est hepe r pe t ua li nvent or ys ys t e ma ndt heFI FOmet hod.Att hee nd oft hefis c alye ar , Dec e mber3 1, 201 5,t hec ompa nyc onduc t e daphys i c a lc ountoft hei nvent or yonhand a tal lwar e hous esands t or es .TheFI FOc os toft hephys i c alc ounti s$ 1, 005 , 400 .Ac c or di ngt ot he r e c or ds , endi ngi nve nt or yus i ngFI FO i s$1, 12 2, 00 0.Whi c hj our nalent r yi sr e qui r eda tDe c e mber31, 2 01 5? A)Noj our nalent r yi sr e qui r e d. B)De bi tI nve nt or y$ 116 , 6 00a ndc r e di tAl l o wa nc et oReduc eI nvent or y$1 16, 6 00. C)De bi tCos tofGoodsSol d$1 16, 60 0andc r e di tAl l owanc et oReduc eI nve nt or y$ 116 , 6 00 . D)De bi tLos sonI nve nt or yShor t a ge$ 11 6, 600andc r e di tI nvent or y$1 16, 60 0. Ans we r :D Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 4)Al ar gec ompanyus esaper pe t uali nve nt or ys ys t em andas ophi s t i c a t e dc omput er i zeds ys t e mt o a c c ountf ori t si nvent or yovert i me .Att heendoft heac c ount i ngper i od,t hec ompanyper f or msa phys i c a lc ountoft hei nvent or yonhandandhi r eshundr edsofwor ke r st oc ar r youtt hi st as k. Requi r e d: 1 .Whydoest hec ompa nyper f or m aphys i c alc ountofi nve nt or y? 2 .Af t e rt hephys i c a lc ountofi nvent or yi sc ompl et ed, de s c r i bet her equi r e dj our na le nt r yandpr ovi dea n e x ampl e . Ans we r : 1 .Thec ompanyper f or msaphys i c alc ountofi nve nt or yt ode t e r mi net heamountofi nve nt or ys t ol e n, da ma ge d,br oke n,obs ol et e ,et c .Theac c ount i ngr e c or dsar eunabl et ode t e r mi net hi si nf or ma t i on. 2 .Thej our na le nt r ywi l lde bi tLos sonI nvent or yShor t a gea ndc r e di tI nve nt or yf ort hel os si nval ueof t hei nvent or y .Fore xa mpl e ,i ft hea c c ount i ngr ec or dss how endi ngi nve nt or yof$ 10 0, 000butaphys i c al c ountonl ys howsendi ngi nve nt or yof$9 9, 00 0,t he nt hedol l aramountoft hej our nalent r yi s$1 , 0 00 . Di ff: 2 Var : 1 Obj e c t i v e:1 0. 1 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

10.2 Inventory Costing: Units and Costs Included 1 )Thet o t alc os ti ndol l ar sofendi ngi nve nt or yi se qualt ot henumberofuni t sonha ndmul t i pl i edbyt he c os tpe runi t . Ans we r :TRUE Di ff: 1 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

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2 )Fr e i ght outc os t sar ei nc l ude daspar tofi nvent or yc os t s . Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

3 )Fr e i ght i nc os t sar et r e at e da sas el l i nge x pens e . Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

4 )Whe ngoodsar es hi ppe df . o. b. s hi ppi ngpoi nt ,t i t l epas s e swhe nt hegoodsr e ac ht hebuyer ' sdoc k. Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

5 )Pur c ha s er e t ur nsandpur c ha s edi s c ount sa r ea ddedt opur c has e st oc al c ul a t ene tpur c ha s e s . Ans we r :F ALSE Di ff: 1 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

6 )Pur c ha s er e t ur nsandpur c ha s edi s c ount sa r es ubt r a c t edf r om pur c has e st oc al c ul at enetpur c ha s es . Ans we r :TRUE Di ff: 1 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

7 )J ami s onCompanys e l l sgoodst oMa t t he wsCompany . Whe nJ ami s ons hi psgoodst oMa t t he wswi t h t er msf . o . b.s hi ppi ngpoi nt , ___ __ ___ . A)J a mi s onCompanyr epor t st hegoodsi ni t si nve nt or ywhe nt hegoodsar ei nt r ans i tt oMa t t he ws Compa ny B)t het i t l epas s e sf r om J ami s onCompanyt oMa t t he wsCompanywhe nt hegoodsar er e c ei ve db y Ma t t he wsCompany C)t het i t l epa s s esf r om J a mi s onCompanyt oMa t t he wsCompa nywhent hegoodsl e a veJ a mi s on Compa ny D)Ma t t he wsCompa nydoe sno ti nc l udet hegoodsi ni t si nve nt or ywhi l et hegoodsa r ei nt r ans i t Ans we r :C Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

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8 )I nvent or yc os t sdono ti nc l ude__ ___ __ _. A)f r ei ght outc os t s B)f r e i ght i nc os t s C)pa c ka gi ngc os t s D)ha ndl i ngc os t s Ans we r :A Di ff: 1 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

9 )Chr i s t i anCompa nyus est hegr os smet hodofr e c or di ngpur c has edi s c ount soni nve nt or yandt he pe r pet ua li nve nt or ys ys t e m.Whe nChr i s t i anCompanyma kespa yme ntf ort hei nvent or ywi t hi nt he di s c ountpe r i od, t hebookke e perwi l l___ __ ___ . A)de bi tAc c ount sPa yabl e ,c r edi tI nvent or yandc r e di tCas h B)de bi tAc c ount sPa yabl eandc r e di tI nvent or y C)de bi tI nve nt or yandc r edi tCas h D)de bi tAc c ount sPa yabl ea ndc r edi tPur c has e s Ans we r :A Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 0)Ya nkeeCompa nyus e st hene tme t hodofr e c or di ngpur c has edi s c ount soni nve nt or ya ndt he pe r pet ua li nve nt or ys ys t e m.Yank eeCompanyr ec or dsapa ymentwi t hi nt hedi s c ountper i od.Whi c h j our na lent r yi spr e par e d? A)Debi tAc c ount sPay abl eandc r e di tCas hf ort hegr os samountoft hepur c has e . B)De bi tAc c ount sPa yabl ea ndc r edi tCa s hf ort hene tamountoft hepur c has e . C)De bi tAc c ount sPa ya bl e ,c r e di tCa s ha ndc r edi tI nvent or y . D)De bi tAc c ount sPa yabl e ,c r e di tCas handc r e di tI nt er e s tRe ve nue . Ans we r :B Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

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1 1)Smi t hMi l l e rEnt er pr i s e shasi nvent or yof$66 7, 00 0i ni t ss t or e sasofDe c e mbe r31 .I ta l s oha st wo s hi pment si nt r a ns i tt ha tl e f tt hes uppl i er s 'war e hous esb yDe c embe r2 8. Bot hs hi pme nt sa r eexpe c t e dt o a r r i veonJ anuar y5.Thefir s ts hi pmentof$12 8, 00 0wa ss ol df . o . b.des t i na t i onandt hes e c onds hi pme nt of$ 80 , 0 00wass ol df . o. b. s hi ppi ngpoi nt .Wha ta mountofi nve nt or ys houl dSmi t hMi l l err epor toni t s bal a nc es hee ta sofDec e mber3 1? A)$66 7, 00 0 B)$8 75, 0 00 C)$ 795 , 000 D)$7 47 , 0 00 Ans we r :D Expl a na t i on:$6 67 , 0 00+$80 , 000 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 2)Bec kCompanyhasi nvent or yof$ 74 3, 000i ni t ss t or e sa sofDec embe r31 .I tal s ohast wos hi pment s i nt r ans i tt ha tl ef tt hes uppl i e r s ' war e hous esbyDe c e mbe r28 .Bot hs hi pment sa r ee xpe c t e dt oar r i veon J anuar y5. Thefir s ts hi pmentof$ 217 , 000wa ss ol df . o. b.de s t i na t i ona ndt hes ec onds hi pmentof$1 10, 00 0 wass ol df . o. b. s hi ppi ngpoi nt .Be c kCompanyal s ohasc ons i gne dgoodsof$ 73, 00 0a wa i t i ngs a l ewi t h Me yerCompany . Wha tamountofi nvent or ys houl dBe c kCompanyr epor toni t sba l anc es he e ta sof De c embe r31? A)$74 3, 00 0 B)$9 26, 0 00 C)$ 1, 07 0, 000 D)$1 , 143 , 0 00 Ans we r :B Expl a na t i on:$7 43 , 0 00+110 , 000+73 , 0 00=$9 26, 000 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

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1 3)Me ye rCo.hast hef ol l owi ngi nf or ma t i ona vai l abl e: Cos tofi nvent or y Fr e i ght i n Fr e i ght out Pa c kagi ngc os t s Handl i ngc os t s

$5 6, 00 0 6 , 0 00 2, 50 0 550 700

Wha tamountofi nve nt or ys houl dt hec ompanyr e por tont heba l anc es he et ? A)$65 , 7 50 B)$6 3, 25 0 C)$ 59, 7 50 D)$5 7, 25 0 Ans we r :B Expl a na t i on:$5 6, 00 0+$ 6, 00 0+$ 550+$7 00=$63 , 250 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 4)OnJ une1 ,Addi s onCompa nypur c ha s e d$ 9, 000ofi nvent or yonac c ountf r om Ga r r i s onCompany . Gar r i s onoffe r sa5% di s c ounti fpa yme nti sr e c ei ve dwi t hi n15da ys .Addi s onr e c or dst hepur c ha s eus i ng t hegr os smet hodandt heper pe t uali nve nt or ys ys t em. Thej our nalent r yonJ une1byAddi s on Compa nyi nc l udes_ ___ __ __. A)ade bi tt oI nve nt or yf or$ 8, 55 0 B)ac r e di tt oAc c ount sPa yabl ef or$8 , 550 C)ade bi tt oI nvent or yf or$ 9, 00 0 D)ac r edi tt oCa s hf or$ 9, 00 0 Ans we r :C Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 5)OnJ une1 ,At ki ns onCompa nypur c ha s ed$7 , 0 00ofi nvent or yonac c ountf r om Donni eCompa ny . Donni eCompanyoffe r sa5 % di s c ounti fpa ymenti sr e c e i ve dwi t hi n15da ys .At ki ns onCompanyr e c or ds t hepur c ha s eus i ngt hegr os sme t hodandt hepe r pe t uali nvent or ys ys t em. At ki ns onCompa nymake st he pa ymentf ort hei nve nt or yonJ une10 .Thej our nale nt r yonJ une10byAt ki ns onCompanyi nc l ude s _ __ ___ __. A)ade bi tt oCas hf or$ 7, 00 0 B)ac r e di tt oCa s hf or$ 6, 650 C)ade bi tt oI nvent or yf or$ 35 0 D)ac r edi tt oI nt e r e s tExpe ns ef or$3 50 Ans we r :B Expl a na t i on:$7 , 000×95 % =$6 , 6 50 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 6)OnJ une1 ,Ke nne dyCompanypur c has e d$ 8, 00 0ofi nve nt or yonac c ountf r om S t er ne rCompa ny . S t er nerCompa nyoffer sa5 % di s c ounti fpa yme nti sr ec ei vedwi t hi n15da ys .Kenne dyCompa nyr ec or ds t hepur c ha s eus i ngt hene tme t hoda ndt heper pe t uali nve nt or ys ys t e m.Thej our na lent r yonJ une1by Kenne dyCompanyi nc l udes_ __ ___ __. A)ade bi tt oI nve nt or yf or$ 8, 00 0 B)ac r e di tt oAc c ount sPa yabl ef or$8 , 000 8 Copyr i ght©2019Pe ar s onEduc a t i on, I nc .

C)ac r e di tt oCas hf or$7 , 6 00 D)ade bi tt oI nvent or yf or$ 7, 60 0 Ans we r :D Expl a na t i on:$8 , 000×95 % =$7 , 6 00 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 7)OnJ une1 ,J ohns onCompan ypur c has e d$ 8, 00 0ofi nve nt or yona c c ountf r om Sc hmi dCompa nyon J une1 .S c hmi dCompa nyoffe r sa4% di s c ounti fpa ymenti sr e c e i vedwi t hi n15da ys .J ohns onCompan y r e c or dst hepur c ha s eus i ngt hene tme t hodandt heper pe t uali nvent or ys ys t e m.J ohns onCompanypa i d f ort hei nvent or yonJ une3 0.Thej our na le nt r yonJ une30byJ ohns onCompanyi nc l ude s_ __ ___ __. A)ade bi tt oAc c ount sPa ya bl ef or$7 , 6 80 B)ade bi tt oAc c ount sPa yabl ef or$8, 0 00 C)ac r e di tt oI nt e r e s tEx pens ef or$32 0 D)ac r edi tt oCa s hf or$ 7, 68 0 Ans we r :A Expl a na t i on:Undert hene tmet hod, ac r e di tof$7 , 6 80( $8 , 000×( 1-0. 04) )woul dha vebee nmadet o a c c ount spa ya bl ewhe nt hepur c ha s ewasmade . The r e f or e ,uponpa yme nt , ac c ount spa y abl ewoul dbe de bi t edf or$7 , 6 80. I nt e r es te xpe ns eof$ 32 0woul da l s obede bi t e d,r e pr es e nt i ngt hedi s c ountl os tbynot pa yi ngt hei nvoi c ewi t hi nt hedi s c ountpe r i od.Cas hwoul dbec r e di t e df or$ 8, 00 0. Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 8)OnAugus t1 0, Char l e sCompanypur c ha s e d75r e f r i ge r a t or sf or$65 0ea c hf r om Appl i anc e s Whol e s al e r s .Thepur c ha s ewasonac c ountwi t ht e r msof3/10 ,n/30 .Cha r l e sCompa nypa i df or50of t her e f r i ge r a t or sonAugus t1 8andt her emai ni ngr ef r i ger a t or sonAugus t3 0. Char l e sCompanyus est he gr os sme t hodf orpur c has edi s c ount sandt heper pe t uali nvent or ys ys t e mt or ec or dt het r ans ac t i ons .On Augus t3 0, Char l e sCompan yr ec or ded___ __ ___ . A)ade bi tt oAc c ount sPa ya bl ea ndac r e di tt oCas h B)ade bi tt oCas ha ndac r e di tt oAc c ount sPa yabl e C)ade bi tt oAc c ount sPa ya bl eandac r edi tt oI nve nt or y D)ade bi tt oCa s ha ndac r e di tt oI nvent or y Ans we r :A Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

9 Copyr i ght©2019Pe ar s onEduc a t i on, I nc .

1 9)Wal kerCompa nypr ovi dest hef ol l owi ngi nf or ma t i on: Be gi nni ngI nvent or y Pur c has es Fr e i ght I n Fr e i ght Out Pur c has eDi s c ount s Pur c has eRet ur ns Endi ngI nvent or y

$ 119 , 0 00 5 10 , 0 00 24 , 000 19, 0 00 5 , 2 00 8, 0 00 1 30, 00 0

Wha ti st hec os tofgoodsava i l abl ef ors al e ? A)$63 9, 80 0 B)$6 58, 8 00 C)$ 769 , 800 D)$6 72 , 0 00 Ans we r :A Expl a na t i on:$1 19 , 0 00+510 , 000+24 , 0 00-5, 20 0-8 , 0 00=$6 39, 80 0 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

2 0)Che tCompa nypr ovi dest hef ol l owi ngi nf or ma t i on: Be gi nni ngI nvent or y Pur c has es Fr e i ght I n Fr e i ght Out Pur c has eDi s c ount s Pur c has eRet ur ns Endi ngI nvent or y

$ 120 , 0 00 5 30 , 0 00 21 , 000 14, 0 00 5, 8 00 8 , 0 00 1 28, 00 0

Wha ti st hec os tofgoodss ol d? A)$65 7, 20 0 B)$5 29, 2 00 C)$ 671 , 000 D)$5 37 , 2 00 Ans we r :B Expl a na t i on:$1 20 , 0 00+530 , 000+21 , 0 00-5, 80 0-8 , 0 00-1 28, 0 00=$5 29, 20 0 Di ff: 2 Var : 1 Obj e c t i v e:1 0. 2 I FRS/GAAP:GAAP AACSB:Appl i c a t i onofknowl e dge

1 0 Copyr i ght©2019Pe ar s onEduc a t i on, I nc .

2 1)TheWys oc kiCompanyhasunde r t ake naphys i c alc ountofi nvent or yonhandonDec e mber3 1, 201 5. Thec os toft hei nve nt or yonhandi s$4 45 , 9 93. Addi t i ona li nf or ma t i onf ol l ows : 1 .Wys oc kiCompanyr e c ei ve dgoodsc os t i ng$ 32, 00 0onJ a nuar y2,2 019 .Thegoodswe r es hi ppe df . o. b. s hi ppi ngpoi nt ,a ndl e f tt hes e l l er ' sbus i ne s sonDe c e mbe r30 ,20 18. 2 .Wys oc kiCompanyr e c ei ve dgoodsc os t i ng$ 40, 00 0onJ a nuar y3,2 019 .Thegoodswe r es hi ppe df . o. b. de s t i na t i on,a ndl e f tt hes el l e r ' sbus i ne s sonDe c e mber3 0, 201 8. 3 .Wys oc kiCompanys ol dgoodsc os t i ng$20 , 0 00onDe c e mber29 ,2 018 .Thegoodswe r epi c kedupby t hec ommonc ar r i e ronDe c embe r29a ...