Question

1.Use the following information for the month of May:



Assuming that a Moving Average perpetual inventory system is used, what is Cost of Goods Sold?

May 1 Beginning inventory 7 Purchases 18 Sales 22 Purchases 29 Sales 20 units @ $16 70 units @ $20 25 units 40 units @ $22 10 units

Select one:

a. $1,880

b. $763

c. $700

d. $680

e. $1,920

2.

.Using the FIFO periodic inventory system, what is Ending Inventory?

May 1 Beginning inventory 7 Purchases 18 Sales 22 Purchases 29 Sales 20 units @ $16 70 units @ $20 25 units 40 units @ $22 10 units

Select one:

a. $1,880

b. $1,980

c. $1,830

d. $1,760

e. $1,900

Answer 1

1.

Date	Purchase			Sale ( at cost )			Balance
	Units	Unit cost	Total cost	Units	Unit cost	Total cost	Units	Unit cost	Total cost
May 1							20	16	320
May 7	70	20	1400				90	19.11	1720
May 18				25	19.11	478	65	19.11	1242
May 22	40	22	880				105	20.21	2122
May 29				10	20.21	202	95	20.21	1920

Cost of goods sold = 478 + 202

680

Option d

2.

2.
Date	Particulars	Units	Unit cost	Total cost
May 1	Beginning inventory	20	16	320
May 7	Purchases	70	20	1400
May 22	Purchases	40	22	880
Goods available for sale				2600

Cost of goods sold = ( 20 * 16 ) + ( 5 * 20 ) + ( 10 * 20 )	620
Ending inventory = Cost of goods available for sale - Cost of goods sold = 2600 - 620	1980	Option b