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# Cost of goods sold , periodic, FIFO,gross profit method

6. A company purchased 100 units for \$20 each on January 31. It purchased 100 units for \$30 on February 28. It sold 150 units for \$45 each from March 1 through December 31. If the company uses the Last-In, First-Out inventory costing method, what is the amount of Cost of goods sold on the December 31 income statement?
\$4,000
\$3,750
\$6,750
\$3,500
None of these is correct

7. In a periodic system, inventory balances and the cost of goods sold for the current period are determined:
at the time of sale.
on a frequent basis.
on the first day of each year.
when a physical inventory count is taken.

8. A purchase return of goods purchased on credit is recorded by the purchasing company as a debit to what account?
Accounts receivable
Inventory
Cost of goods sold
Accounts payable

9. When a company uses FIFO, the Cost of goods sold correlates to the most recently purchased goods, and the ending inventory correlates to the oldest goods in stock.
True
False

10. The following data is available:
Net sales, first month \$13,000
Normal gross profit 45%
Beginning inventory 8,000
Net purchases 7,000

Using the gross profit method, the Estimated ending inventory balance would be:
\$15,000
\$ 7,150
\$ 7,850
\$ 5,850
None of these is correct

#### Solution Preview

6. A company purchased 100 units for \$20 each on January 31. It purchased 100 units for \$30 on February 28. It sold 150 units for \$45 each from March 1 through December 31. If the company uses the Last-In, First-Out inventory costing method, what is the amount of Cost of goods sold on the December 31 income statement?
\$4,000 ***
\$3,750
\$6,750
\$3,500
None of these is correct

COACHING TIP: Sold all the Feb 28th purchase 100 x \$30 plus 50 of the Jan 31 purchase x \$20 = \$4,000

7. In a periodic system, inventory balances and the cost of goods sold for the ...

#### Solution Summary

Your tutorial includes coaching tips for each questions and the best selection. A reference for gross profit method is given.

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