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Question (Category: Business Accounting )
Penn Foster - 061690RR - ACCOUNTING FOR MERCHANDISING ONLY WITH DETAILED SOLUTIONS!!! 1. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is the inventory record for Product C124 What is the average cost per unit after the receipt of the June 21 inventory? Date Received Sold CostUnit Balance April 22 534 $6.58 $3,513.72 May 17 433 $6.70 $2,901.10 June 21 389 $6.76 $2,629.64 August 2 436 $6.44 $2,807.84 A. $6.72 B. $6.62 C. $6.61 D. $6.67 2. Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journal entry to record this purchase for Meranda under a perpetual inventory system is A. debit Accounts Payable-Ashley credit Inventory. B. debit Inventory credit Accounts PayablemdashMeranda. C. debit Inventory credit Accounts PayablemdashAshley. D. debit Inventory credit Cash. 3. Casey Companys beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows ( Note The company uses a perpetual system of inventory.) Units Unit Price Total Cost January 1mdashBeginning Inventory 20 $12 $240 March 8mdashSold 14 April 2mdashPurchase 30 $13 $0 June 5mdashSold 25 Aug 6mdashPurchase 25 $14 $350 Total Cost of Inventory $980 Ending inventory is 14 units. What is the ending inventory of Casey Company for 2012 using FIFO? A. $196 B. $175 C. $168 D. $182 4. A companys current ratio increased from 1.23 to 1.45. What does this mean? A. This means that current assets increased and current liabilities decreased. B. This means that current assets decreased and current liabilities decreased. C. This means that current assets increased and current liabilities increased. D. There isnt enough information to explain the increase. 5. When a merchandiser sells on account, which of the following is not needed to record the transaction? A. Inventory B. Accounts receivable C. Cost of goods sold D. Cash 6. Nick Company reports the following inventory information What is the total value of the merchandise under LCM (lower-of-cost or market)? Inventory Number Inventory Quantity Unit Cost Unit Market Value APD 4837 440 $51.29 $51.48 CPZ 2837 290 $76.59 $77.02 IXL 9291 310 $42.34 $42.47 EOD 1717 200 $22.19 $21.75 DKS 3088 180 $31.22 $31.17 A. $68,113.30 B. $67,961.70 C. $68,210.30 D. $67,864.70 7. When a company repays the seller for shipping costs on an FOB shipping transaction, which of the following is true? A. A purchase discount can still be taken on the gross amount of the invoice. B. A purchase discount can still be taken net of the prepaid shipping charges. C. A purchase discount cannot be taken when shipping charges are prepaid. D. The shipping costs dont affect the invoice cost. 8. ABC Corporation pays an invoice for $350 in time to take a 3% discount. The journal entry to record the payment of this invoice is A. debit Accounts Payable $340 debit Inventory $10 credit Cash $350. B. debit Accounts Payable $350 credit Inventory $10.50, credit Cash $3.50. C. debit Accounts Payable $340 credit Cash $340. D. debit Accounts Payable $350 credit Cash $350. 9. Besides using an overstatement of earnings to inflate a companys stock price, overstating earnings may also be used to A. deflate the amount of taxes the corporation pays. B. avoid paying raises to employees. C. ensure larger bonuses to upper management at year-end. D. avoid paying dividends to stockholders. 10. Casey Companys beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows ( Note The company uses a perpetual system of inventory.) What is the cost of goods sold for Casey Company for 2012 using LIFO? Units Unit Price Total Cost January 1mdashBeginning Inventory 20 $12 $240 March 8mdashSold 14 April 2mdashPurchase 30 $13 $0 June 5mdashSold 25 Aug 6mdashPurchase 25 $14 $350 Sept 11mdashSold 22 Total Cost of Inventory $980 Ending inventory is 14 units. A. $784 B. $308 C. $801 D. $264 11. In a balance sheet prepared in report form, liabilities must be listed after A. stockholders equity. B. assets with long-term liabilities listed first. C. assets in alphabetical order. D. assets with current liabilities listed first. 12. Which of the following may not limit the effectiveness of internal control systems in an organization? A. Understanding of policies and procedures B. Poorly designed controls C. Duties not segregated D. Costs not worth benefits 13. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is the inventory record for Product C124 What is the average cost per unit after the receipt of the May 17 inventory (rounded to the nearest cent)? Date Received Sold CostUnit Balance April 22 534 $6.58 $3,513.72 May 17 433 $6.70 $2,901.10 June 21 389 $6.76 $2,629.64 August 2 436 $6.44 $2,807.84 A. $6.55 B. $7.40 C. $6.00 D. $6.63 14. Net sales times the historical gross profit percentage yields the estimated A. beginning inventory. B. ending inventory. C. gross profit. D. cost of goods sold. 15. Which items may not limit the effectiveness of internal control systems in an organization? A. Costs not worth benefits B. Overriding controls C. Properly designed controls D. Collusion 16. A low gross profit percentage means that A. the cost of goods sold was relatively low. B. the cost of goods sold was relatively high. C. selling expenses are very low. D. general and administrative expenses are very high. 17. Committing a fraud because the employee feels that it will be easy to do is indicative of which part of the fraud triangle? A. Rationalization B. Perceived opportunity C. Realization D. Perceived pressure 18. Which of the following would probably not need to be disclosed in a footnote? A. A material change in estimated shrinkage B. Change of inventory methods End of exam C. A 10% increase in sales D. A change in depreciation method 19. Under Sarbanes-Oxley, those officers signing off on the reports must have evaluated the companys internal control within the previous A. year. B. 90 days. C. nine months. D. six months. 20. To pay the least income tax possible in periods of rising inventory costs, the company should use which inventory costing method? A. LIFO B. Average cost C. FIFO D. Specific identification


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