PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

CHAPTER 8: ACCOUNTING FOR INVENTORIES

1. Company Y has the following inventory data:

August 1 Beginning inventory 20 units at RM10
8 Purchases 130 units at RM15
17 Sale 80 units
25 Purchases 30 units at RM20
30 Sale 60 units

Assuming that a perpetual inventory system is used, what is ending inventory (rounded into 2
decimal places) under the average cost method for August?
a. RM641.20
b. RM611.11
c. RM641.33
d. RM500.00

2. Simpson Inc. purchased inventory as follows:

Jan. 5 500 units at RM10.00
Jan. 15 1,000 units at RM15.00
Jan. 25 200 units at RM20.00

What is the average unit cost of inventory?

a. RM14.12
b. RM15.00
c. RM13.00
d. RM15.83

3. Delightful Discs has the following inventory data:

Nov. 1 Inventory 30 units @ RM6.00 each
8 Purchase 120 units @ RM6.45 each
17 Purchase 60 units @ RM6.30 each
25 Purchase 90 units @ RM6.60 each

A physical count of merchandise inventory on November 30 reveals that there are 100 units on
hand. Ending inventory under FIFO periodic inventory system is
a. RM657
b. RM632
c. RM1,269
d. RM1,295
PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

4. Hardaway Inc. purchased inventory as follows:

Jan. 10 - 200 units at RM5.00
Jan. 20 - 500 units at RM10.00
Jan. 30 - 800 units at RM15.00
Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31.
Assuming the weighted-average method is used, ending inventory would be ________.

a. RM18,000
b. RM4,000
c. RM7,500
d. RM6,000

5. Hardaway Inc. purchased inventory as follows:

Jan. 10 - 200 units at RM5.00
Jan. 20 - 500 units at RM10.00
Jan. 30 - 800 units at RM15.00
Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31.
Assuming the periodic inventory system - FIFO method is used, ending inventory would be
________.

a. RM13,000
b. RM4,000
c. RM7,500
d. RM5,000

6. Baker Bakery Company just began business and made the following four inventory purchases
in June:

Purchase Purchase units Cost per unit Total purchase cost

date (RM) (RM)

June 1 150 units ? 1,040

10 200 units ? 1,560

15 200 units ? 1,680

28 150 units ? 1,320

A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand.
Using the FIFO periodic inventory method, the amount allocated to ending inventory for June is
PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

a. RM1,456
b. RM1,508
c. RM1,824
d. RM1,848

7. Zimmerman Inc. uses a periodic inventory system. Details for the inventory account for the
month of October are shown below:

Assume that on October 31, there are 80 units on hand. If the company uses FIFO, what is the
value of ending inventory?
a. $400
b. $335
c. $373
d. $360

8. Zimmerman Inc. uses a periodic inventory system. Details for the inventory account for the
month of October are shown below:

Assume that on October 31, there are 80 units on hand. If the company uses FIFO, what is the
value of the cost of goods sold for October?
a. $1,000
b. $1,200
c. $1,065
d. $1,028

9. Zimmerman Inc. uses a periodic inventory system. Details for the inventory account for the
month of October are shown below:
PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

Assume that sales price is RM10 and there are 80 units on hand as ending inventory. If the
company uses FIFO, what is the value of the gross profit for October?
a. $1,000
b. $1,200
c. $1,065
d. $1,028

10. A company purchased merchandise to be resold at increasing costs during the year 2020. The
purchases were made at the following costs.

The company sold 10 items at the end of each month.

What are the number of units available for sales and the cost of the goods available for sale?

A.150 units, $1,770

b. 150 units, $1,386
c.130 units, $1,570
d.130 units, $1,770

11. A company purchased merchandise to be resold at increasing costs during the year 2020. The
purchases were made at the following costs.

The company sold 10 items at the end of each month.

Assuming the FIFO periodic cost flow assumption, what will be the company's cost of goods
sold for the 120 items sold in 2020?
PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

a. $1,380
b. $1,386
c. $1,410
d. $1,460

12. A company purchased merchandise to be resold at increasing costs during the year 2020. The
purchases were made at the following costs.

The company sold 10 items at the end of each month.

Assuming the periodic weighted-average cost flow assumption, what is the company's cost of
goods sold for the 120 items sold in 2020 (round up unit costs to two decimal places)?

a. $1,380
b. $1,386
c. $1,416
d. $1,460

13. A company purchased merchandise to be resold at increasing costs during the year 2020. The
purchases were made at the following costs.

The company sold 10 items on both dates (January 31 & December 31).
Assuming the perpetual FIFO cost flow assumption, what is the company's cost of goods sold in
2020?

a. $200
b. $260
c. $210
d. $201

14. A company purchased merchandise to be resold at increasing costs during the year 2020. The
purchases were made at the following costs:
PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

The company sold 10 items on both dates (January 31 & December 31).
Assuming the perpetual moving-average cost flow assumption, what is the company's cost of
goods sold in 2020 (round up unit costs to two decimal places)?

a. $225.50
b. $225.00
c. $225.05
d. $255.50

15. A company purchased merchandise to be resold at increasing costs during the year 2020. The
purchases were made at the following costs:

The company sold 10 items on both dates (January 31 & December 31).
Assuming the perpetual moving-average cost flow assumption, what is the company's ending
inventory in 2020 (round up unit costs to two decimal places)?

a. $1544.50
b. $1544
c. $1544.05
d. $1455.05

16. A business commenced on 1 January and purchases are made as follows:

Month No. of units Unit cost Total cost

(RM) (RM)

Jan 380 2.00 760

Feb 400 2.50 1,000

Mar 350 2.50 875

Apr 420 2.75 1,155

May 430 3.00 1,290

PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

June 440 3.25 1,430

2420 6,510

In June, 1,420 articles were sold for RM7,000. What is the cost of closing inventory and gross
profit for the period using the periodic system - FIFO method:

Closing inventory Gross profit

a. RM 2,690 RM 3,180

b. RM2,310 RM 2,800

c. RM 3,077.50 RM 3,567.50

17. Based on Question 16, what is the cost of goods sold for the period using the periodic system
- FIFO method?

a.RM3432.50
b.RM3077.50
c.RM3567.50
d.RM2690

18. The management of Mastro Corp. is considering the effects of inventory costing methods on
its financial statements and its income tax expense. Assuming that the price the company pays
for inventory is increasing, which method will result in the lowest income tax expense?

a) FIFO Method
b) Average-cost Method

19. Company Y has the following inventory data:

August 1 Beginning inventory 20 units at RM10 RM 200

8 Purchases 130 units at RM15 RM1,950

17 Sale 80 units at RM20

Assuming that a perpetual inventory system FIFO is used, what are the journal entries required
for transaction occurred on Aug 17?

a. Dr COGS 800 Dr Accounts receivable 1600

Cr Inventory 800 Cr Sales 1600
PROGRAM SMART ACCOUNTING SEMESTER 1 AA015 AMBILAN 2021

b. Dr COGS 1200 Dr Accounts receivable 1600

Cr Inventory 1200 Cr Sales 1600

c. Dr COGS 1100 Dr Accounts receivable 1600

Cr Inventory 1100 Cr Sales 1600

d. Dr COGS 1600 Dr Accounts receivable 1600

Cr Inventory 1600 Cr Sales 1600

e. Dr Accounts receivable 1600

Cr Sales 1600