7. A company just starting in business purchased three inventory items at the following prices: first purchase $110; second purchase $115; third purchase $120. If the company sold two units for a total of $300 and used FIFO costing, the gross profit for the period would be: a. $65. b. $60. *c. $75. d. $70. Answer: c
Learning objective 5.5. Explain the basis of accounting for inventories and apply the inventory cost flow methods under a periodic inventory system.
8. A truck costing $12,000 and on which $9,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include a: