Question

QUESTION 10 Delta Diamonds uses a periodic inventory system. The company had five one-cara diamonds available for sale this year one was purchased on June 1 for $450, two were purchased on July 9 for $550 each, and we were purchased on September 23 for 5600 each on December 24 it sold one of the diamonds that was purchased on July 9. Using the specific identification method, its ending inventory (after the December 24 sale) equals: 5550 $3200 52300 $1550 QUESTION 11 Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value? Weighted average LIFO Specific identication FIFO QUESTION 12 Sparks Furniture Company carries three lines of sofas Information about the sofa inventory as of the end of its most recent fiscal year follows. LCM is applied to each separate product line, what is the amount of the adjustment that must be made to the company's inventory? Rustic $765 5855 735 Mediterranean 665 Contempor $14300 $43 100 $102.000 $58900 QUESTION 13 Hoover Company purchased two identical inventory items. The item purchased first cost $36.50. The item purchased second cost $40.25. Then Hoover sold one of the inventory items for $70. Based on this information, w of the following statements is true? The ending Inventory is $40.25 If Hoover uses the LIFO Cost flow method. The cost of goods sold is 536.50 if Hoover uses the LIFO cost flow method. The gross margin is $31.63 if Hoover uses the weighted average cost flow method. The cost of goods sold is $40.25 If Hoover uses the FIFO Cost flow method.

Answer 1

Question 10 : Date Activity 01-Jun Purchases 09-Jul Purchases 23-Sep Purchases No of Units Cost per unit 450.00 2 $ 550.00 2 $ 600.00 Total Cost $ 450.00 1,100.00 1,200.00 $ 2,750.00 Cost of Goods available for sale Less : Cost of Goods sold (Since Specified Unit) 550.00 $ 550.00 2,200.00 Ending Inventory Option [B] is Correct Question 11 : Option [B] is Correct Lifo Method will produce an amount of cost of goods sold that is closest to current market value. Since in LIFO method, Goods sold are recorded at cost - the goods which are purchased latest and Which are purchased first will become ending inventory Question 12 : Option [C] is Correct Product Line Rustic Mediterranean Contemporary Quantity Cost per unit Market value per unit Lower of cost or MV Total of lower of cost /mv Total cost 320 $ 765.00 $ 855.00 $ 765.00 $ 244,800.00 $ 244,800.00 430 $ 665.00 $ 735.00 $ 665.00 $ 285,950.00 $285,950.00 340 $ 1,000.00 $ 700.00 $ 700.00 $ 238,000.00 $340,000.00 768,750.00 $ 870,750.00 Cost Value Less : Carrying amount Write down value $ 870,750.00 $ (768,750.00) $ 102,000.00 Question 13 : First purchased item Cost Second purchased item Cost $36.50 $40.25 It sold one of inventory items Option [C] is Correct Gross margin is $31.63 , if Hoover uses weigthed avg cost flow method Explaination : Avg cost per unit = 36.50-40.25/2 $ 38.38 Sales Less : cost of goods sold Gross Margin $ $ $ 70.00 (38.38) 31.63