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1. Effie Company uses a periodic inventory system. Details for the inventory account for the month of...

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Accounting

1.

Effie Company uses a periodic inventory system. Details for theinventory account for the month of January, 2013 are asfollows:

Units

Per unit price

Total

Balance, 1/1/13

200

$5.00

$1,000

Purchase, 1/15/13

100

5.30

530

Purchase, 1/28/13

100

5.50

550


An end of the month (1/31/13) inventory showed that 140 units wereon hand. If the company uses LIFO, what is the value of the endinginventory?

A.

$742

B.

$728

C.

$762

D.

$700

2.

A company just starting business made the following fourinventory purchases in June:

June

1

150 units

$ 390

June

10

200 units

585

June

15

200 units

630

June

28

150 units

510

$2,115


A physical count of merchandise inventory on June 30 reveals thatthere are 200 units on hand. Using the LIFO inventory method, thevalue of the ending inventory on June 30 is

A.

$668.

B.

$536.

C.

$1,447.

D.

$1,564.

3.

Romanoff Industries had the following inventory transactionsoccur during 2013:

Units

Cost/unit

2/1/13

Purchase

18

$45

3/14/13

Purchase

31

$47

5/1/13

Purchase

22

$49


The company sold 50 units at $70 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is thecompany's after-tax income using FIFO? (rounded to wholedollars)

A.

$1,184

B.

$1,106

C.

$774

D.

$829

Answer & Explanation Solved by verified expert
3.9 Ratings (592 Votes)

1 Closing Units 140
LIFO, Last in First Out means closing units will be from Old Purchases
Units Rate Amt
Opening Inventory 140 5 700
Answer is D
2 Closing Units 200
LIFO, Last in First Out means closing units will be from Old Purchases
Units Rate Amt Value Qty Rate PU
Jun-01 150 2.60 390 Jun-01 390 150 2.60
Jun-10 50 2.93 146 Jun-10 585 200 2.93
200 536
Answer is B
3 Closing Units 200 Qty Rate PU Value
Purc-1 18 45.00 810
Cost of Goods will be: Purc-2 31 47.00 1457
Units Rate Amt Purc-3 22 49.00 1078
Purc-1 18 45 810 71 3345
Purc-2 31 47 1457
Purc-3 1 49 49
50 2316
Income Statement:
Sales 3500 (50*70)
Less: COGS 2316
Gross 1184
Less : Tax 30% 355
Net Income 829
Answer is D

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