Reference no: EM132452386

Questions -

Q1. TX Manufacturing purchased inventory for $2,500 and paid a $200 freight bill. TX Manufacturing returned $350 of the goods to the seller and then took a 2% purchase discount. What is TX Manufacturing's final cost of the inventory that it kept?

A. $2,307

B. $2,303

C. $2,300

D. $2,107

Q2. Assume Red Rover began June with 52 units of merchandise inventory, with a cost of $17 per unit. During June, Red Rover purchased and sold goods as follows:

June 8	Purchase	42 units @ $15
June 14	Sale	60 units @ $40
June 22	Purchase	28 units @ $25
June 27	Sale	42 units @ $40

Under the FIFO inventory costing method, how much is Red Rover's cost of goods sold for the sale on June 14?

A. $510

B. $2,400

C. $1,004

D. $936

Q3. After the sale on June 14, what is Red Rover's cost of the merchandise inventory on hand, assuming that Red Rover uses FIFO? (Reference Question 3 information.)

A. $510

B. $2,400

C. $1,004

D. $936

Q4. After the sale on June 14, what is Red Rover's cost of the merchandise inventory on hand, assuming that Red Rover uses LIFO? (Reference Question 3 information.)

A. $510

B. $578

C. $900

D. $2,400

Q5. Suppose Red Rover uses the weighted-average method and the perpetual inventory system. Use the Red Rover data from Question 3 to compute the weighted-average unit cost of the company's inventory on hand on June 8. Round unit cost to the nearest cent.

A. $16.11

B. $16.50

C. $18.15

D. $19.00

Q6. $19.00 RT Company's Cash account shows an ending balance of $1,850. The bank statement shows a $52 service charge and an NSF check for $280. Other records indicate that a $240 deposit is in transit, and outstanding checks total $535. What is RT's adjusted cash balance?

A. $1,223

B. $1,518

C. $1,555

D. $2,078

Q7. Which of the following bank reconciliation items is correctly described?

A. Deposits in transit increase the book side of the reconciliation.

B. NSF checks increase the book side of the reconciliation.

C. Outstanding checks decrease the bank side of the reconciliation.

D. Service charges decrease the bank side of the reconciliation.

Q8. Assume you are opening a furniture store. To finance the business, you need a $500,000 loan, and your banker requires a set of forecasted financial statements. Assume you are preparing the statements and must make some decisions about how to do the accounting for the business.

Requirements - Answer the following questions:

1. Which type of inventory system will you use: perpetual or periodic? Explain your reason.

2. Show how to compute net purchases and net sales revenue. How will you treat the cost of freight in?

3. How often do you plan to do a physical count of inventory on hand? What will the physical count accomplish?

4. Inventory costs are rising. Which inventory costing method would have the effect of

a. maximizing net income?

b. minimizing the amount of income tax?