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Loss On Inventory Chapter 7

Determine the effect on a company’s Assets and Net Income from the following transaction: a loss on inventory is recorded as an adjusting entry.

Assets Net Income
A Decreased Decreased
B Decreased No effect
C Increased No effect
D Increased Increased
E None of the above

Inventory Costing Chapter 7

A company uses the periodic inventory system to account for inventories. Information related to the company’s inventory for the month of October is given below:

Date Units Unit Cost Total Cost
Beginning 150 2.20 330
Oct. 2 600 2.40 1,440
Oct. 10 500 2.50 1,250
Oct. 17 500 2.60 1,300
Oct. 28 700 2.70 1,890

During October the company sold 1,400 units at $6.00 per unit.

  1. Determine the value of Cost of Goods Sold using the Average Cost Method of inventory valuation.
    • $2,661
    • $3,472
    • $3,690
    • $3,548
  2. Determine Gross Profit for the month of October using the FIFO cost assumption.
    • $4,990
    • $4,710
    • $5,600
    • $3,410
  3. Determine Ending Inventory using the LIFO cost assumption
    • $2,800
    • $3,410
    • $2,520
    • $,3690