ACCT 2100 Chap 3 Practice Quiz
Which of the following are examples of merchandising businesses?
General Electric, Wal-Mart, Best Buy
Ford, Safeway, Macy's
Sears, Sam's Club, Home Depot
Apple, Hershey Corporation, Albertson's
Merchandising businesses generate revenue by selling goods. They buy the merchandise from suppliers,
hold it for resale, and then sell the goods to end users, which includes consumers as well as other
businesses. The other businesses listed (General Electric, Ford, Apple, Hershey) are examples of
Lionsclaw, Inc., which operates a perpetual inventory system, incurred the following transactions
during the 2009 fiscal year:
At January 1, the company had no inventory of washers
The company purchased 3,000 washers for $300 each.
Lionsclaw sold 2,000 washers for $500 each
Given that these are the only events occurring in 2009, what is the value of inventory as of the
end of 2009?
Under the perpetual system, the company purchased 3,000 items for $300 each, totaling $900,000. The
company sold 2,000 of these items for $500 each. The cost of these items was $300 each. Therefore, the
value of the 2,000 items sold was $600,000 (2,000 x $300). This will leave $300,000 in inventory as of the
end of the year.
LO: LO 1, 2
A company that operates a perpetual inventory system purchases 1,000 items of inventory for
$40 per item. The goods are shipped FOB shipping point. The freight cost is $800. What is the
per unit value of inventory as a result of this transaction?