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Question 5 options:

In this section, all questions are worth 1 mark unless indicated otherwise. There are 26 marks in total.

Hamilton Wholesale Inc. had the following inventory transactions for one month. The company uses a perpetual system and FIFO. All purchases and sales are on account.

		# of	unit cost or
		items	sale price
March 1	Opening balance	30	$15
March 5	Purchase	25	$19
March 7	Purchase of March 5 items returned	-5
March 10	Sale	40	$40
March 12	Purchase	20	$22
March 17	Sale	15	$50
March 24	Purchase	25	$24

REQUIRED:

Use an inventory cost chart and an accounting chart to analyze the above transactions, and then answer the questions below.

ENTRY RULES:

Where you are asked to enter a percentage, enter ONLY the digits. For example, 78 percent must be entered as 78. Do not use a % sign or a decimal point. All such answers will be integers. No rounding is required.

Dollar figures should be entered WITHOUT dollar signs, commas, decimal points or pennies.

How should the March 5 transaction be recorded? (2 marks)

A. increase Purchases, increase Accounts Payable

B. increase Inventory, increase Accounts Payable

C. increase Inventory, decrease Cash

D. increase Purchases, decrease Cash

E. increase Inventory, increase Cost of Goods Sold

F. increase Purchases, increase Cost of Goods Sold

Enter the letter that corresponds to your choice. (A B C D E F)

How will the March 7 purchase return be recorded? (2 marks)

A. decrease Purchases, decrease Accounts Payable

B. decrease Inventory, decrease Cost of Goods Sold

C. increase Purchase Returns, decrease Accounts Payable

D. decrease Purchases, increase Cash

E. decrease Inventory, increase Cash

F. increase Purchase Returns, increase Cash

G. decrease Inventory, decrease Accounts Payable

H. increase Purchase Returns, decrease Cost of Goods Sold

Enter the letter that corresponds to your choice. (A B C D E F G H)

What is the value of the inventory after the March 7 transaction?

How will the March 10 sale be recorded? (4 marks)

A. increase Sales, increase Cost of Goods Sold, increase Inventory, increase Accounts Receivable

B. increase Sales, decrease Cost of Goods Sold, increase Inventory, decrease Accounts Receivable

C. decrease Sales, increase Cost of Goods Sold, increase Inventory, decrease Accounts Receivable

D. increase Service Revenue, increase Cost of Goods Sold, decrease Inventory, increase Cash

E. increase Sales, increase Cost of Goods Sold, decrease Inventory, increase Cash

F. increase Sales, increase Cost of Goods Sold, decrease Inventory, increase Accounts Receivable

G. increase Sales, increase Cost of Goods Sold, increase Inventory, increase Accounts Payable

H. increase Sales, decrease Cost of Goods Sold, increase Inventory, decrease Accounts Payable

Enter the letter that corresponds to your choice. (A B C D E F G H)

What amount of cost of goods sold will be recorded on March 10?

What is the value of the inventory after the March 10 transaction?

What is the gross profit percentage on the March 10 sale?

What is the amount of gross profit on the March 10 sale?

What is the value of the inventory after the March 12 transaction?

What amount of cost of goods sold will be recorded on March 17?

What is the value of the inventory after the March 17 transaction?

What is the gross profit percentage on the March 17 sale?

What is the amount of gross profit on the March 17 sale?

What is the value of the inventory after the March 24 transaction?

What is the total revenue for the month?

What is the total gross profit for the month? (2 marks)

What is the amount of the adjustment that must be made to inventory at the end of the month if the selling price drops to $15?

Start your answer with a + sign if an increase, a - sign if a decrease, or enter 0 if no adjustment is needed. (2 marks)

What is the amount of the adjustment that must be made to inventory at the end of the month if the selling price drops to $25?

Start your answer with a + sign if an increase, a - sign if a decrease, or enter 0 if no adjustment is needed. (2 marks)

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