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Jerome's Fashion Dezigns sells a variety of items of clothing including footwear for men and uses a perpetual inventory system. The business began the last quarter of 2017 with 25 pairs of the "Jordan" brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter. October 10 Purchased 100 pairs of sneakers on account at a cost of $5,945 per pair. In addition, Jerome paid $405 in cash on each pair of shoes to have the inventory shipped from the vendor's warehouse to Jerome's showroom. During the month 90 pairs were sold at a unit selling price of $8,255. | October 30 November 1 A new batch of 60 pairs was purchased on account at a total cost of $406,500 November 14 5 pairs of the sneakers purchased on November 1 were found to be of the wrong description and returned to the supplier November 30 The sales for November were 60 pairs of sneakers which yielded total sales revenue of $430,000. December 2 Odail Thomas, a customer to whom 10 pairs were sold at the close of business on November 30, returned 4 pairs of the sneakers, as they were of the wrong colour. What is the accounting treatment if we are using the FIFO method for the transaction on December 2, 2017? O a. 4 pairs would be taken out of COGS at a rate of $6,775 per pair and the inventory ending balance would be increased. O b. 4 pairs would be taken out of COGS at a rate of $6,350 per pair and inventory balance would be increased O. 4 pairs would be taken out of COGS at the LIFO rate and inventory ending balance would be increased. O d. 4 pairs would be taken out of purchases at a rate of $6,775 per pair and the inventory ending balance would be decreased.

Jerome's Fashion Dezigns sells a variety of items of clothing including footwear for men and uses a perpetual inventory system. The business began the last quarter of 2017 with 25 pairs of the "Jordan" brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter. October 10 Purchased 100 pairs of sneakers on account at a cost of $5,945 per pair. In addition, Jerome paid $405 in cash on each pair of shoes to have the inventory shipped from the vendor's warehouse to Jerome's showroom. During the month 90 pairs were sold at a unit selling price of $8,255. | October 30 November 1 A new batch of 60 pairs was purchased on account at a total cost of $406,500 November 14 5 pairs of the sneakers purchased on November 1 were found to be of the wrong description and returned to the supplier November 30 The sales for November were 60 pairs of sneakers which yielded total sales revenue of $430,000. December 2 Odail Thomas, a customer to whom 10 pairs were sold at the close of business on November 30, returned 4 pairs of the sneakers, as they were of the wrong colour. What is the accounting treatment if we are using the FIFO method for the transaction on December 2, 2017? O a. 4 pairs would be taken out of COGS at a rate of $6,775 per pair and the inventory ending balance would be increased. O b. 4 pairs would be taken out of COGS at a rate of $6,350 per pair and inventory balance would be increased O. 4 pairs would be taken out of COGS at the LIFO rate and inventory ending balance would be increased. O d. 4 pairs would be taken out of purchases at a rate of $6,775 per pair and the inventory ending balance would be decreased.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter7: Budgeting
Section: Chapter Questions
Problem 11EA: Dream Big Pillow Co. pays 65% of its purchases in the month of purchase, 30% the month after the...
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Jerome's Fashion Dezigns sells a variety of items of clothing including footwear for men and uses a perpetual inventory system. The business began the last quarter of 2017 with 25 pairs of the "Jordan" brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter. October 10 Purchased 100 pairs of sneakers on account at a cost of $5,945 per pair. In addition, Jerome paid $405 in cash on each pair of shoes to have the inventory shipped from the vendor's warehouse to Jerome's showroom. During the month 90 pairs were sold at a unit selling price of $8,255. A new batch of 60 pairs was purchased on account at a total cost of $406,500 October 30 November 1 November 14 5 pairs of the sneakers purchased on November 1 were found to be of the wrong description and returned to the supplier November 30 The sales for November were 60 pairs of sneakers which yielded total sales revenue of $430,000. December 2 Odail Thomas, a customer to whom 10 pairs were sold at the close of business on November 30, returned 4 pairs of the sneakers, as they were of the wrong colour. What is the accounting treatment if we are using the FIFO method for the transaction on December 2, 2017? a. 4 pairs would be taken out of COGS at a rate of $6,775 per pair and the inventory ending balance would be increased. O b. 4 pairs would be taken out of COGS at a rate of $6,350 per pair and inventory balance would be increased Oc. 4 pairs would be taken out of COGS at the LIFO rate and inventory ending balance would be increased. O d. 4 pairs would be taken out of purchases at a rate of $6,775 per pair and the inventory ending balance would be decreased.
Transcribed Image Text:Jerome's Fashion Dezigns sells a variety of items of clothing including footwear for men and uses a perpetual inventory system. The business began the last quarter of 2017 with 25 pairs of the "Jordan" brand at a total cost of $152,500. The following transactions, relating to the Jordan brand, took place during the quarter. October 10 Purchased 100 pairs of sneakers on account at a cost of $5,945 per pair. In addition, Jerome paid $405 in cash on each pair of shoes to have the inventory shipped from the vendor's warehouse to Jerome's showroom. During the month 90 pairs were sold at a unit selling price of $8,255. A new batch of 60 pairs was purchased on account at a total cost of $406,500 October 30 November 1 November 14 5 pairs of the sneakers purchased on November 1 were found to be of the wrong description and returned to the supplier November 30 The sales for November were 60 pairs of sneakers which yielded total sales revenue of $430,000. December 2 Odail Thomas, a customer to whom 10 pairs were sold at the close of business on November 30, returned 4 pairs of the sneakers, as they were of the wrong colour. What is the accounting treatment if we are using the FIFO method for the transaction on December 2, 2017? a. 4 pairs would be taken out of COGS at a rate of $6,775 per pair and the inventory ending balance would be increased. O b. 4 pairs would be taken out of COGS at a rate of $6,350 per pair and inventory balance would be increased Oc. 4 pairs would be taken out of COGS at the LIFO rate and inventory ending balance would be increased. O d. 4 pairs would be taken out of purchases at a rate of $6,775 per pair and the inventory ending balance would be decreased.
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