J & G sells a variety of school supplies from a store located at Red Mountain Mall. The business began the second quarter (April to June) of 2009 with 2,000 pencil cases at a total cost of $200,000. The following transactions took place during the quarter. April 10 Purchased 3,000 pencil cases on account at a cost of $110 each. An additional air freight charge of $2, as well as customs import charge of $3 per case was incurred and paid It is customary for J & G to include freight in as part of the còst of the units in their inventory record. April 30 May 1 During the month 1, 000 pencil cases were sold at a price of $160 each. A new batch of 3,200 cases was purchased on account at a cost of $352,000. May 15 15 of the pencil cases purchased on April 10 were found to be defective and returned to the supplier. May 28 The sales for May were 2,350 pencil cases at a unit selling price of $120. 10 of the pencil cases sold at the start of business on May 28 were retuned by the customer. May 31 What is the accounting treatment if we are using the FIFO method for the transaction at May 15, 2009? O a. 15 pencil cases would be taken out of COGS at a rate of $112 per pencil case. O b. 15 pencil cases would be taken out of COGS at a rate of $115 per pencil case and inventory balance would be increased 15 pencil cases would be taken out of purchases at a rate of $115 per pencil case and the inventory ending balance would be decreased. 15 pencil cases would be taken out of COGS at the FIIFO rate and inventory ending balance would be increased. Od.
J & G sells a variety of school supplies from a store located at Red Mountain Mall. The business began the second quarter (April to June) of 2009 with 2,000 pencil cases at a total cost of $200,000. The following transactions took place during the quarter. April 10 Purchased 3,000 pencil cases on account at a cost of $110 each. An additional air freight charge of $2, as well as customs import charge of $3 per case was incurred and paid It is customary for J & G to include freight in as part of the còst of the units in their inventory record. April 30 May 1 During the month 1, 000 pencil cases were sold at a price of $160 each. A new batch of 3,200 cases was purchased on account at a cost of $352,000. May 15 15 of the pencil cases purchased on April 10 were found to be defective and returned to the supplier. May 28 The sales for May were 2,350 pencil cases at a unit selling price of $120. 10 of the pencil cases sold at the start of business on May 28 were retuned by the customer. May 31 What is the accounting treatment if we are using the FIFO method for the transaction at May 15, 2009? O a. 15 pencil cases would be taken out of COGS at a rate of $112 per pencil case. O b. 15 pencil cases would be taken out of COGS at a rate of $115 per pencil case and inventory balance would be increased 15 pencil cases would be taken out of purchases at a rate of $115 per pencil case and the inventory ending balance would be decreased. 15 pencil cases would be taken out of COGS at the FIIFO rate and inventory ending balance would be increased. Od.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:J & G sells a variety of school supplies from a store located at Red Mountain Mall. The business began the second
quarter (April to June) of 2009 with 2,000 pencil cases at a total cost of $200,000. The following transactions took
place during the quarter.
April 10
Purchased 3,000 pencil cases on account at a cost of $110 each. An
additional air freight charge of $2, as well as customs import charge of $3
per case was incurred and paid. It is customary for J & G to include freight
in as part of the còst of the units in their inventory record.
April 30
During the month 1, 000 pencil cases were sold at a price of $160 each.
May 1
A new batch of 3,200 cases was purchased on account at a cost of $352,000.
May 15
15 of the pencil cases purchased on April 10 were found to be defective and
returned to the supplier.
The sales for May were 2,350 pencil cases at a unit selling price of $120.
May 28
May 31
10 of the pencil cases sold at the start of busimess on May 28 were returned
by the customer.
What is the accounting treatment if we are using the FIFO method for the transaction at May 15, 2009?
O a. 15 pencil cases would be taken out of COGS at a rate of $112 per pencil case.
Ob. 15 pencil cases would be taken out of COGS at a rate of $115 per pencil case and inventory balance
would be increased
15 pencil cases would be taken out of purchases at a rate of $115 per pencil case and the inventory
OC.
ending balance would be decreased.
Od 15 pencil cases would be taken out of COGS at the FIFO rate and inventory ending balance would be
increased.
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