Question

ACC 160 ASA COLLEGE PROF. K. JEFFERS FALL 2019 FINAL "A" NAME: SHOW ALL CALCULATIONS WHERE REQUIRED Section 1-INTRODUCTION TO ACCOUNTING FOR INVENTORY All companies are on a calendar year unless otherwise stated. 1. During ZipCo's first year of operation, it purchases $125,000 of inventory on account. If ending inventory is $25,000, and sales are $150,000, what is ZipCo's first-year gross profit? $25,000 b. a. $50,000 $75,000 d. c. $100,000 For the year, FlabCo has beginning inventory of $120,000 and net purchases of $70,000. A yearend physical count of inventory shows $110,000 in inventory. On FlabCo's income statement, COGS is $190,000 $180,000 $80,000 $40,000 2. a. b. c. d. For the year, your company's gross profit is $250,000, sales are $320,000 and ending inventory is $75,000. If net purchases are $100,000, then COGS is: $70,000 b. 3. a. $95,000 $110,000 d. $130,000 c. During AdCo's first year of operations, it purchases $125,000 of inventory on account for a total of $105,000. If AdCo's ending inventory is $25,000 and sales are $150,000, what is the cost of goods sold? $25,000 b. 4. a. $50,000 C. $75,000 d. $100,000 5. For the year, your company's sales are $305,000, the gross profit is $250,000, and ending inventory is $75,000. If net purchases are $100,000, beginning inventory must have been: $30,000 b. a. $55,000 $85,000 d. $120,000 C. Page 1 of 13

Answer 1

Solution - 1	Calculation of First year gross profit of Zip Co. :
		= Sales + Closing Inventory - Opening Inventory - Purchase
		= $ 1,50,000 + $ 25,000 - $ 0 - $ 1,25,000
		= $ 50,0000
	Therefore, ( b ) $ 50,000 is correct answer.
Solution - 2	Calculation of COGS of Flab Co's income statement :
		= Opening Inventory + Purchase - Closing Inventory
		= $ 1,20,000 + $ 70,000 - $ 1,10,000
		= $ 80,0000
	Therefore, ( c ) $ 80,000 is correct answer.
Solution - 3	Calculation of COGS :
	First calculate Opening inventory
		= Sales + Closing Inventory - Purchase - Gross Profit
		= $ 3,20,000 + $ 75,000 - $ 1,00,000 - $ 2,50,000
		= $ 45,000
	Calculation of COGS
		= Opening Inventory + Purchase - Closing Inventory
		= $ 45,000 + $ 1,00,000 - $ 75,000
		= $ 70,0000
	Therefore, ( a ) $ 70,000 is correct answer.
Solution - 4	Calculation of COGS :
		= Opening Inventory + Purchase - Closing Inventory
		= $ 0 + $ 1,25,000 - $ 25,000
		= $ 1,00,0000
	Therefore, ( d ) $ 1,00,000 is correct answer.
Solution - 5	Calculation of Opening inventory :
		= Sales + Closing Inventory - Purchase - Gross Profit
		= $ 3,05,000 + $ 75,000 - $ 1,00,000 - $ 2,50,000
		= $ 30,0000
	Therefore, ( a ) $ 30,000 is correct answer.