Question

It will be greatly appreciated if you can help to answer the following multiple choices. Thanks a lot.

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A company had inventory of 8 units at a cost of $20 each on April 1. On April 2, they purchased 8 units at $15 each each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold? On April 6 they chased 5 units at S Γ each. April 8, they sold 18 units or 52 O $282 O $426. $355. O $393. $330.

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Answer 1

1) Stock ledger A/C: (Last in First out i.e; LIFO Receipt (Purchase Issued (Sales Balance Date Price in $ Amount Q Price Amount Q Price Amount April 1st Opening 160 160 April 2nd Purchase 20 15 160 April 6th Purchase 110 20 15 160 110 April 8th Sales 110 20 15 20 100 Therefore, Total cost of 18 units sold will be 110 + 120 + 100 = $330 and cost of remaining 3 units will be $ 60 From the option , E .

2) Since; there is practice of the company that it uses the percent of sales to determine the bad debts expenses Therefore It continues the same practices in current year Since ; The all sales are of made on credit. We can assume to be 0.6% of credit sale are uncollectable By using the , credit sales of $798,000 at 0.6 % are uncollectable Bad Debts Expense will be 798000 * 0596-4788. Since, There is allowance for doubtful accounts. So, We can add allowance for doubtful account to Bad debts Expense. Therefore, Total bad debts will be $4788+$620 $5408. From the option , D .