Question

Response Questions Part A TOD A) Ilusions, Inc. had the following inventory data: Quantity 5 Unit Cost $53 $55 Dale July 1 July 4 July 7 July 11 July 14 Beginning inventory Purchase Sale Purchase Sale 10 12 $57 Assuming LIFO, what is the ending inventory after the July 14 sale? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.) O A. $228 OB. $221 C. $216 OD. $212 Syrio's Snowboards has the following LIFO perpetual inventory records: Date Purchases Cost of Goods Sold Inventory on Hand February 1 $500 February 5 $500 $1.000 February 10 $500 $500 February 28 $400 $900 The current replacement cost of the ending inventory is $1,400. To apply the lower-of-cost-or-market rule, the journal entry would be: O A. debit Cost of Goods Sold $500, credit Inventory $500. OB. No entry required, since historical cost is loss than replacement OC. No entry required, since the amount is not material. OD. debit Inventory $500, credit Cost of Goods Sold $500. B) If Cost of Goods Sold was understated in Period 1, then Cost of Goods Sold and gross profit in Period 2 will be: O A. both understated. OB. overstated for cost of goods sold and understated for gross profit. O c. both overstated. O D. understated for cost of goods sold and overstated for gross profit. Gecko Enterprises had the following inventory data: Dale Quantity Unit Cost July 1 Beginning inventory 5 $50 July 4 Purchase 10 $56 July 7 Sale July 11 Purchase $58 July 14 Sale Assuming average cost, what is the ending inventory after the July 14 sale? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar) O A $224 OB. $228 OC. $212 OD. $232 D)

Answer 1

A) In LIFO the last quantity purchased will be sold first so in this case 10 quantity purchased on July 4 will be sold first on July 7 and then the remaining quantity will be sold as per the rate of purchase made on on July 1st. So the calculation will be 53*3 + 57 = 216. So the correct answer is C

B) As the cost of goods sold is underrated in period 1 same will be carry forward in period 2 hence cost of goods sold in Period 2 be underrated. On the other hand due to underrated cost of goods sold the gross profit will be overrated in period 1 hence it will be carry forward in period 2 therefore it will be overrated in period 2 as well. So the correct answer is D

C) in average cost method total purchase made before the first sale will be calculated and an average price of cost will be taken into consideration while taking the inventory. In this case after July 7. 3 quantities are left @ of rate of 54(5*50+10*56)/(15) is the average price of the beginning and purchase made on July 7. Also on July 11 9:00 quantities the purchase at the price of 58 so now the average price of 12 (9+3 )units will be calculated by multiplying quantities with the rate and dividing the total quantities it will come to 57 (3*54 + 9*58)/(12)

Hence the total inventory will be 57*4 = 228

Correct answer is B

D) there is no question for D part therefore I am not able to answer it.