6.A company's beginning inventory was overstated by $3,000, now ending inventory is understated by $2,000. If purchases were properly reported, then earnings before taxes will be:

A)   understated by $5,000.

B)   overstated by $5,000.

C)   understated by $1,000.

D)   overstated by $1,000.

7.The Mountain Bike Supply Company had 500 units in its beginning inventory. Each of these units cost $5. During the period, Mountain Bike Supply first purchased 400 units at $6 each and then 200 units at $7 each. At the end of the period, Mountain Bike Supply had 600 units. What is the cost of goods sold and inventory for Mountain Bike Supply if it uses FIFO inventory valuation?

A)   $2,500                          $3,100

B)   $3,200             $3,800

C)   $2,500            $3,800

D)   $3,200             $3,100

8.Inventory value at the end of the period using the average cost method is:

A)   $1,540.

B)   $177.

C)   $2,100.

D)   $4,680.

9.Inventory value at the end of the period using FIFO is:

A)   $1,200.

B)   $175.

C)   $150.

D)   $6,000.

10.Inventory value at the end of the period using LIFO is:

A)   $250.

B)   $1,200.

C)   $2,100.

D)   $2,400.

答案和详解如下：

6.A company's beginning inventory was overstated by $3,000, now ending inventory is understated by $2,000. If purchases were properly reported, then earnings before taxes will be:

A)   understated by $5,000.

B)   overstated by $5,000.

C)   understated by $1,000.

D)   overstated by $1,000.

The correct answer was A)

COGS overstated by 5,000 so EBT understated by 5,000.

7.The Mountain Bike Supply Company had 500 units in its beginning inventory. Each of these units cost $5. During the period, Mountain Bike Supply first purchased 400 units at $6 each and then 200 units at $7 each. At the end of the period, Mountain Bike Supply had 600 units. What is the cost of goods sold and inventory for Mountain Bike Supply if it uses FIFO inventory valuation?

COGS

Inventory

A)   $2,500                          $3,100

B)   $3,200             $3,800

C)   $2,500            $3,800

D)   $3,200             $3,100

The correct answer was C)

Under FIFO:

COGS	= 500 @ $5 = $2,500
Inventory	= 200 @ $7 + 400 @ $6 = $3,800

Purchases	Sales
20 units at $50	15 units at $60
35 units at $40	35 units at $45
85 units at $30	85 units at $35

Assume beginning inventory was zero.

8.Inventory value at the end of the period using the average cost method is:

A)   $1,540.

B)   $177.

C)   $2,100.

D)   $4,680.

The correct answer was B)

Average Cost = Cost of Goods Available / Total Units Available

Average Cost = $4,950 / 140 = $35.36

EOP Inventory Value = $35.36 x 5 = $176.79

9.Inventory value at the end of the period using FIFO is:

A)   $1,200.

B)   $175.

C)   $150.

D)   $6,000.

The correct answer was C)   

(Units purchased minus units sold) times cost = EOP value

(140 – 135) x $30 = $150

10.Inventory value at the end of the period using LIFO is:

A)   $250.

B)   $1,200.

C)   $2,100.

D)   $2,400.

The correct answer was A)

5 x $50 = $250

	Units	Unit Price
Beginning Inventory	709	$2.00
Purchases	556	$6.00
Sales	959	$13.00
SGA Expenses	$2,649 per annum