The business had 200 units in inventory at 1st February 2018 valued at RO 20. On 10th February Purchase made 400 units at RO 30 each. On 28th February Sales made 500 units at RO 40 each. What will be the cost of goods sold value at the end of February 2018 assuming that the business uses LIFO method? a. OMR 13,000 b. OMR 14,000 c. OMR 2,000 d. OMR 20,000

The business had 200 units in inventory at 1st February 2018 valued at RO 20. On 10th February Purchase made 400 units at RO 30 each. On 28th February Sales made 500 units at RO 40 each. What will be the cost of goods sold value at the end of February 2018 assuming that the business uses LIFO method? a. OMR 13,000 b. OMR 14,000 c. OMR 2,000 d. OMR 20,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 7MCQ

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Costco, Walmart, Nordstrom: Inventory turnover and number of days sales in inventory The general merchandise retail industry has a number of segments represented by the following companies: Company Name Merchandise Concept Costco Wholesale Corporation Membership warehouse Walmart Stores, Inc. Discount general merchandise Nordstrom, Inc. Fashion department store For a recent year, the following cost of goods sold and beginning and ending inventories are provided from corporate annual reports (in millions) for these three companies: Costco Walmart Nordstrom Cost of goods sold 98,458 365,086 8,406 Inventories: Beginning of year 7,894 44,858 1,531 End of year 8,456 45,141 1,733 A. Determine the inventory turnover ratio for all three companies. (Round all calculations to one decimal place.) B. Determine the number of days sales in inventory for all three companies. (Use 365 days and round all calculations to one decimal place.) C. Interpret these results based on each companys merchandising concept.
Sales-related transactions The- following selected transactions were completed by Affordable Supplies Co., which sells supplies primarily to wholesalers and occasionally to retail customers. Jan. 6. Sold merchandise on account, $14,000. terms FOB shipping point, n/com. The cost of merchandise sold was $8,400. 8. Sold merchandise on account. $20,000. terms FOB destination. 1/10. n/30. The cost of merchandise sold was $14,000. 16. Sold merchandise on account, $19-500. terms FOB shipping point, n/30. The cost of merchandise sold was $11,700. 18. Received check for amount due for sale on January 8. 19. Issued credit memorandum for $4,500 for merchandise returned from sale on January 16. The cost of the merchandise returned was $2,700. 26. Received check for amount due for sale on January 16 less credit memorandum of January 19. 31. Paid Cashell Delivery Service $3,000 for merchandise delivered during January to customers under shipping terms of FOB destination. 31. Received cheek for amount due for sale of January 6. Instructions Illustrate the effects of each of the preceding transactions on the accounts and financial statements of Affordable Supplies Co. Identify each transaction by date.
Appendix Periodic inventory accounts, multiple-step income statement, closing entries On June 30, 2018, the balances of the accounts appearing in the ledger of Simkins Company are as follows: Cash 125,000 Dividends 275,000 Accounts Receivable 72,000 Sales 6,590,000 Inventory, July 1, 2017 415,000 Purchases 4,100,000 Estimated Returns Inventory, July 1,2017 25,000 Purchases Returns and Allowances 32,000 Purchases Discounts 13,000 Office Supplies 9,000 Freight In 45,000 Prepaid Insurance 18,000 Sales Salaries Expense 580,000 Land 300,000 Advertising Expense 315,000 Store Equipment 550,000 Delivery Expense 18,000 Accumulated Depreciation Store Equipment 190,000 Depreciation Expense Store Equipment 12,000 Office Equipment 250,000 Miscellaneous Selling Expense 28,000 Accumulated Depreciation Office Equipment 110,000 Office Salaries Expense 375,000 Rent Expense 43,000 Accounts Payable 85,000 Insurance Expense 17,000 Salaries Payable 30,000 Office Supplies Expense 5,000 Customer Refunds Payable 9,000 Depreciation Expense Office Equipment 4,000 Unearned Rent 6,000 Notes Payable 50,000 Miscellaneous Administrative Expense 16,000 Common Stock 300,000 Rent Revenue 32,500 Retained Earnings 520,000 Interest Expense 2,500 Instructions 1. Does Simkins Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Simkins Company for the year ended June 30, 2018. The inventory as of June 30, 2018, was 508,000. The estimated cost of customer returns inventory for June 30, 2018, is estimated to increase to 33,000. 3. Prepare the closing entries for Simkins Company as of June 30, 2018. 4. What would be the net income if the perpetual inventory system had been used?
Analyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following transactions: a. Made credit sales of $825,000. The cost of the merchandise sold was $560,000. b. Collected accounts receivable in the amount of $752,600. c. Purchased goods on credit in the amount of $574,300. d. Paid accounts payable in the amount of $536,200. Required: Prepare the journal entries necessary to record the transactions. Indicate whether each transaction increased cash, decreased cash, or had no effect on cash.
Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: May 1. Paid rent for May, 5,000. 3. Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, 36,000. 4. Paid freight on purchase of May 3, 600. 6. Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, 68,500. The cost of the merchandise sold was 41,000. 7. Received 22,300 cash from Halstad Co. on account. 10. Sold merchandise for cash, 54,000. The cost of the merchandise sold was 32,000. 13. Paid for merchandise purchased on May 3. 15. Paid advertising expense for last half of May, 11,000. 16. Received cash from sale of May 6. 19. Purchased merchandise for cash, 18,700. 19. Paid 33,450 to Buttons Co. on account. 20. Paid Korman Co. a cash refund of 13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was 13,500 and the cost of the returned merchandise was 8,000. Record the following transactions on Page 21 of the journal: 20. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, 110,000. The cost of the merchandise sold was 70,000. 21. For the convenience of Crescent Co., paid freight on sale of May 20, 2,300. 21. Received 42,900 cash from Gee Co. on account. May 21. Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, 88,000. 24. Returned of damaged merchandise purchased on May 21, receiving a credit memo from the seller for 5,000. 26. Refunded cash on sales made for cash, 7,500. The cost of the merchandise returned was 4,800. 28. Paid sales salaries of 56,000 and office salaries of 29, 000. 29. Purchased store supplies for cash, 2,400. 30. Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, 78,750. The cost of the merchandise sold was 47,000. 30. Received cash from sale of May 20 plus freight paid on May 21. 31. Paid for purchase of May 21, less return of May 24. Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark () in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). f. The adjustment for customer returns and allowances is 60,000 for sales and 35,000 for cost of merchandise sold. 5. (Optional) Enter the unadjusted trial balance on a IO-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.