Practice MC2F05 - Practice Questions for Midterm II 1) A...

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Practice Questions for Midterm II 1) A preliminary count of items in XYZ Company’s warehouse as of 12/31/04 indicates an inventory balance of $100,000. Included in this figure is $5,000 worth of inventory on consignment from ABC Co. (XYZ is the consignee). In addition, a shipment of $50,000 worth of inventory purchased by XYZ with terms FOB shipping is in transit as of 12/31/04, as is a shipment of $40,000 worth of inventory sold by XYZ with terms FOB destination. What should the value of ending inventory be on XYZ’s 12/31/04 balance sheet? a. $110,000 b. $105,000 c. $185,000 d. $150,000 2) JFK Company manufactures wadgets, which are similar to widgets, only better. Expenditures for which of the following should NOT be included in ending wadget inventory? a. Wages paid to line workers who make the wadgets b. Commissions paid to sales personnel who actively market the wadgets to customers c. Purchase price of raw materials used to make wadgets d. Transportation (Freight) costs associated with delivery of raw materials from JFK’s suppliers to JFK’s manufacturing plant 3) What are the differences between a perpetual vs a periodic inventory system? i. Under a perpetual system purchases are recorded as they occur; this is not true in a periodic system; ii. Under a perpetual system cost of goods sold is recorded as sales occur; this is not true in a periodic system; iii. Application of LIFO in perpetual system will yield a different value of ending inventory than in a periodic system (assuming purchase prices change throughout the period); iv. Application of FIFO in perpetual system will yield a different value of ending inventory than in a periodic system (assuming purchase prices change throughout the period); a. i. only b. ii. only c. ii and iii. d. All of the above e. None of the above Use the following fact pattern for JHS Corp for question 4-6. JHS uses a periodic inventory system. Units Unit Price Cost Beg Inv. 100 2.00 $ 200.00 $ Purchases 2/15/2005 150 2.25 $ 337.50 $ 4/18/2005 200 2.50 $ 500.00 $ 6/19/2005 50 2.15 $ 107.50 $ 11/15/2005 100 2.00 $ 200.00 $ Sales 3/15/2005 50 5/4/2005 75 9/21/2005 75 12/8/2005 100
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4) What is COGS using LIFO? a. $682.5 b. $662.5 c. $672.5 d. There is not enough information to determine the correct answer 5) What is EI using FIFO? a. $682.5 b. $662.5 c. $672.5 d. There is not enough information to determine the correct answer 6) What is COGS using average cost? a.
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This note was uploaded on 06/23/2008 for the course BUSINESS 06a taught by Professor Hart during the Spring '06 term at University of Iowa.

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Practice MC2F05 - Practice Questions for Midterm II 1) A...

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