Chapter 6

Question 1

Click here to watch the FIFO Method video and then answer the questions included below.
1. Which of the following inventory costing method is based on the assumption that the first unit of inventory available for sale is the first unit sold?
Specific Identification
a.FIFO
b.LIFO
c.Moving Average

Answer 1

FIFO

Question 2

A company purchases 50 units of inventory for $3.50 on January 5 and 35 units for $3.00 on January 25. It sells a total of 65 units on January 31. If the company is following the FIFO method of inventory costing, what is the total cost of the inventory sold?
$220
$210
$213.85
$215

Answer 2

$220

Question 3

.  Which of the following inventory costing method is based on the assumption that the last unit of inventory available for sale is the first unit sold?
Specific Identification
FIFO
LIFO
Moving Average

Answer 3

LIFO

Question 4

A company purchases 20 units of inventory for $5.50 on January 5 and 25 units for $6.00 on January 25. It then sells a total of 30 units on January 31. If the company is following the LIFO method of inventory costing, what is the total cost of the inventory sold?
$170
$172.50
$173.50
$177.50

Answer 4

$177.50

Question 5

Which of the following inventory costing method determines the cost based on the average unit cost of the inventory available for sale?
Specific Identification
FIFO
LIFO
Moving Average

Answer 5

Moving Average

Question 6

A company purchases 40 units of inventory for $4.00 and 20 units for $3.00. It sells a total of 55 units on a particular date. If the company is following the Moving average method of inventory costing, what is the total cost of the inventory sold?
$200
$201.85
$205
$220

Answer 6

$201.85

Question 7

1. Which of the following is not true of accounts receivable?
   Accounts receivable is an amount owed by a customer on purchase of company products or services.
   Accounts receivable is recorded at the time of sale.
   Accounts receivable is reported at net realizable value.
   Losses from the inability to collect accounts receivable are recorded in the accounting system as sales returns.

Answer 7

Losses from the inability to collect accounts receivable are recorded in the accounting system as sales returns.

Question 8

The amount of cash that a company expects to collect from its total or gross accounts receivable balance is called:
Accounts receivable
Net realizable value
Sales returns
Bad debt

Answer 8

Net realizable value

Question 9

Losses from the inability to collect accounts receivable are recorded in the accounting system as:
Uncollectable accounts
Sales returns
Bad debts expense
Other expense

Answer 9

Bad debts expense

Question 10

What is true of the direct-write off method of estimating bad debt expense?
The receivable is written off the company’s accounting records.
The amount is recorded as a bad debt expense.
It accounts for the receivable with only one entry.
All of these choices are correct.

Answer 10

All of these choices are correct.

Question 11

At the end of the current year, the accounts receivable account has a balance of $821,000 and net sales for the year total $9,310,000.
Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions:
The allowance account before adjustment has a negative balance of $11,100. Bad debt expense is estimated at 1/2 of 1% of net sales.
The allowance account before adjustment has a negative balance of $11,100. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $35,500.
The allowance account before adjustment has a positive balance of $6,000. Bad debt expense is estimated at 3/4 of 1% of net sales.
The allowance account before adjustment has a positive balance of $6,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $49,800.

Answer 11

a. 46550
b. 46600
c. 69825
d. 43800