ACCT 212 2023 with complete solution questions and answers

Awesome Sweets sells different kinds of cookies, candies, and other sweets. Awesome Sweets has a return on assets (ROA) of 6.9% How does Awesome Sweets know if the 6.9% ROA is a good return to attract possible investors? The return on assets (ROA) would have to be compared to the ROA's of competing businesses that sell the same type of products. If 6.9% is higher than the ROA of other companies in the same type of business, then it would be a good investment. A field of accounting that focuses on providing information for internal decision makers is: managerial Williams Travel Service pays $100 cash for salaries expense. How would this transaction affect the accounting equation? Assets decrease and Equity decreases. Assets would decrease (Cash decreases) and Equity would decrease (Expenses, Salaries Expense in this case, causing Equity to decrease). The field of accounting that focuses on providing information for external decision makers is: financial accounting ROA NI/Total Assets Graff Company had the following data for the month of November: Graff, Capital, November 1 = $10,000 Net Income = $2,000 Graff, withdrawals = $1,200 What is the amount of Graff, Capital account as of November 30th? 1.$10,800. (10,000-1,200) = 8,800.2. 8,800+2000 = 10,800 The Chartered Global Management Accountant (CGMA) designation can be earned by accountants. What areas of advanced knowledge are tested on the CGMA exam? finance, strategy and managment, operations Accountants can obtain the CGMA designation to distinguish themselves as professionals with advanced knowledge in the areas of finance, operations, strategy, and management. Jones Company had net income of $10,000 for the year. Beginning total assets were $150,000 and ending assets were $200,000. What is Jones Company's return on assets (ROA) for the year? ROA = net income / average total assets = $10,000 / [($150,000 + 200,000)/2] = .057 = 5.7% (rounded) Which financial statement is prepared first? income statement Sam's Taxi Cab Service performed transportation services for a customer on account for $1,200. How would this transaction affect the accounting equation? Assets would increase (Accounts Receivable increases) and Equity would increase (Service Revenue increases). Which of the following organizations monitors the work of independent auditors? Public Company Accounting Oversight Board Williams Travel Service purchased office supplies on account for $300. How would this transaction affect the accounting equation? Assets Increase (Office supplies increase) and Liabilities Increase (Accounts Payable Increase) Donler Tax Service performed services on account for $10,200 and paid expenses totaling $5,400. What is Donler's Net Income or Net Loss? 4800 NI Smith Decorating Services pays $200 cash for rent expense. How would this transaction affect the accounting equation? Assets would decrease (Cash decreases)Equity would decrease (Expenses, Rent Expense in this case, causing Retained Earnings to decrease). Williams Travel Service purchased land for cash. How would this transaction affect the accounting equation? assets increase and decrease Williams Travel Service performed travel booking services for a customer on account for $1,200. How would this transaction affect the accounting equation? Assets increase and Equity increases since Retained Earnings increases with service revenue Which of the following transactions would impact Equity? Owner contributions of cash into the businessOwner withdrawal of cash from the business.Rent expense incurred by the business.Sales of product by the business. Williams Travel Service pays $100 cash for salaries expense. How would this transaction affect the accounting equation? Assets decrease and Equity decreases. Complete Computer Services reports Total Assets of $1,000, Total Liabilities of $200, and Total Equity of $800. What is Complete Computer Services debt ratio? The debt ratio can be expressed as Total Liabilities / Total Assets. Therefore, the debt ratio is $200/$1,000 = 20%. On March 17, John Write, owner of Complete Computer Service, made $1,000 cash withdrawal from the business. The journal entry to record this transaction would be: dr. withdrawls cr. cash On March 3, Complete Computer Service made a $300 payment on the Accounts Payable for a previous purchase on account. The journal entry to record this transaction would be: dr. ap cr. cash On March 16, John Write, owner of Complete Computer Service, contributed a building to the business with a fair market value of $3,000 in exchange for capital. The journal entry to record this transaction would be: dr. building cr. capital On March 15, Complete Computer Service purchased a $25,000 building in exchange for a notes payable. The journal entry to record this transaction would be: dr. building cr. notes payable On January 2, Complete Computer Service prepays one year of insurance of $2,400. The journal entry to record this transaction would be: dr. prepaid incsurance cr. cash On January 20, Complete Computer Service purchases $200 of office supplies on account. The journal entry to record this transaction would be: dr. office supplies cr. ap On January 25, Complete Computer Services received cash of $1,500 for service revenue earned. The journal entry to record this transaction would be: dr. cash cr. service revenue On January 1, John Write, owner of Complete Computer Service, invested $10,000 in cash and the business in exchange for capital. The journal entry to record this transaction would be: dr. cash cr. capital A record of transactions in date order. journal provides evidence and data for an accounting transaction source document A list of all of a company's accounts with numbers. chart of accounts The record holding all the accounts of a business, the changes in those accounts, and their balances. ledger On March 1, Complete Computer Service paid cash of $900 for rent expense for the current month. The journal entry to record this transaction would be: dr. rent expense cr. cash Which of the following statements about the trial balance are true? It is a list of all accounts and their balances at a point in time. The trial balance and the balance sheet are not the same: formats and purposes are quite different. The financial statements are prepared from the trial balance. The accounts on the trial balance are listed with assets followed by liabilities and then equity related accounts. Which of the following is a list of accounts that shows how the accounting system accounts are organized in a manner similar to that of a table of contents of a book? Chart of accounts Jones Company received $2,200 in cash during March for Service Revenue for a job that will be completed in May. This job would be completed before the end of the year when the financials are prepared. Since it is short lived and will be earned during this accounting period, Jones Company decided to record it as revenue instead of a liability at the time the cash was received in March. The journal entry to record this transaction when Jones Companyt received the cash in March would be: dr. cash cr. service revenue What is the purpose of the worksheet? It summarizes data for the preparation of the financial statements. Interest of $100 is accumulated on a notes payable, although the company will not pay the interest until next year. What is the adjusting journal entry at the end of the year for the accrued interest? dr. in exp ct. int pay Software Solutions was hired by Jones Company on December 1 to install and updated software. The total entire amount of $1,800 in revenues is to be paid to Software Solutions by Jones Company when the job is completed the following January 31. As of December 31, one half of the software installation and updates has been completed. On December 31, Software Solutions makes the following entry to adjust for the revenues earned during December: dr. ar 900 cr. service rev 900 If a journal entry for accrued interest that incurred during this year but will be paid until next year is accidently omitted, what would be the impact on the financial statements? Net Income would be overstated (Expenses understated) and Balance Sheet liabilities would be understated. Smith Company had $1,200 in office supplies at the beginning of the fiscal year. At the end of the fiscal year, Smith Company did an inventory of the office supplies and determined that $400 of supplies remained in the supply room unused. What is the journal entry to adjust for the use of supplies at the end of the fiscal year? dr. supplies expense 800 cr. office supplies 800 Assume the weekly payroll of the Abbott Company is $5,000. December 31, the end of the year, falls on a Wednesday and Abbott will pay its employees on Friday for the full week. What adjusting entry will Abbott make on Wednesday, December 31? (Use five days as a full work week) dr. salaries expense cr. salaries payable 3000 On the worksheet, the Service Revenue account has a credit balance of $20,000 on the Unadjusted Trial Balance. In the Adjustments there is a credit of $2,000. What is the amount for Service Revenue in the Adjusted Trial Balance? 22k Uptown Theatre has customers who prepay a total of $1,000 for season tickets to attend five upcoming shows. Uptown Dinner Theatre collects the $1,000 in advance before the shows are performed. After three shows are performed, what should Uptown Theatre report on its income statement assuming it used the accrual basis accounting method? 1000/5= 200 x 3 service rev 600 Jones Company purchased $800 in office supplies with cash this year but it will be used up before the end of the year when the financials are prepared. Since it is short lived and will be used up during this accounting period, Jones Company decided to record it as an expense instead of an asset at the time of purchase. The journal entry to record this transaction when Jones Company buys the office supplies would be: dr. supplies exp cr. cash Which of the following is an example of an accrued expense adjusting entry? Recording the amount of Salaries Expense for employees that is not paid yet. A piece of equipment purchased cost $10,000 and has depreciation expense of $2,000 for this year. What is the journal entry to record the depreciation expense for the year? dr. dep exp cr. ad The purpose of adjusting entries is to ________. update the account balances at the end of each period to match revenues and expenses to the appropriate period Advance cash payments of future expenses. deferred exp Advance cash receipts of future revenues. Deferred revenues An expense that has been incurred but not paid. accrued expenses A revenue that has been earned but cash has not yet been collected. Accrued revenues Jones Company paid $1,200 with cash this year in January for six months rent. Therefore, it will be used up before the end of the year when the financials are prepared. Since it is short lived and will be used up during this accounting period, Jones Company decided to record it as an expense instead of an asset at the time of payment. The journal entry to record this transaction when Jones Company pays the cash for the six months rent would be: dr. rent exp cr. cash When the prepaid rent is used within the same accounting period, you can record the transaction as a debit to Rent Expense at the time the cash is paid instead of as an Asset to Prepaid Rent. Since it was paid in cash, the credit entry is to cash (cash decreases). If a journal entry for the use of one month of rent from the prepaid rent account during the year is accidently omitted, what would be the impact on the financial statements? Net Income would be overstated (Expenses understated) and Balance Sheet assets would be overstated. Which of the following accounts would NOT appear on the post-closing trial balance? service revenue On the worksheet, after totaling the debit and credit Balance Sheet columns, the difference is ________. the amount of Net Income or Net Loss for the period The journal entry to close out a credit balance in Service Revenues of $2,000 for the period would be: dr. service rev cr. income summary Which of the following accounts appears in one of the Balance Sheet columns of the worksheet? ar Which of the following accounts is NOT closed at the end of the accounting period? building On December 31, before the closing entries, the following information is available for Jones Company: Service Revenue $12,000 Total Expenses 6,000 Jones, Withdrawals 2,000 Jones, Capital 15,000 The balance of Jones, Capital after all closing entries would be: $19,000 The current owner's capital of $15,000 would be increased by Service Revenue of $12,000. It would then be decreased by total expenses of $6,000 and decreased by withdrawals of $2,000. So (15,000 + 12,000 - 6,000 - 2,000) = $19,000 as the owner's capital balance after closing entries. Which of the steps below comes first in the accounting cycle? Analyze and journalize transactions Analyzing and journalizing transactions needs to take place before the other steps of the accounting ous The following is given for the totals of Jones Company: Total Current Assets $10,000 Total Assets 30,000 Total Current Liabilities 6,000 Total Liabilities 12,000 Total Equity 18,000 What is Jones Company's current ratio? ca/cl 1.67 Jones Company has Cash of $600, Accounts Receivable of $500, Office Supplies of $100, and a Building with a cost of $50,000. Jones Company owes $300 on Accounts Payable and has Salaries Payable of $200. What is Jones Company's current ratio? 2.4 The journal entry to close out a $200 debit balance in the Withdrawals account for the period would be: dr. capital cr. withdrawls After completing the closing entries for Revenues and Expenses, the Income Summary account has a credit balance of $2,000. The journal entry to close out the $2,000 credit balance of Income Summary would be: dr. income summary cr. capital Which of the following steps of the accounting cycle is done continuously through the accounting cycle (NOT just done at the end of an accounting period)? Analyze and journalize transaction as they occur. Analyze and journalize transaction as they occur is done continuously, not just at the end of the accounting period. The other items listed are only done at the end of each accounting period. A company will report a $20,000 net loss on its income statement and is now closing its accounts to Income Summary. After the closing entries for revenues and expenses, the Income Summary is closed by which of the following entries? Debit Owner Capital, Credit Income Summary Which of the following is generally a FALSE statement for the current ratio analysis? Companies want a current ratio number below 1. Which of the following accounts would be included in the Plant Asset category of the Classified Balance Sheet? building Smith Company recorded an adjustment for salaries on December 31 of $1,500. On January 1 of the following year, the company reverses this adjusting entry before payment. What is the journal entry made on January 1 to reverse the adjusting entry made on December 31 of the previous year? dr. salaries payable 1500 ies expense 1500 The journal entry to close out a debit balance in Rent Expense of $200 for the period would be: dr. income summary cr. rent expense Abbott Company paid $100 in freight charges to ship goods to a customer and did not charge the customer for the freight. Abbott uses the perpetual system. The journal entry to record this transaction would be: Delivery Expense: 100 debit Cash: 100 credit When the seller pays the shipping costs, it is a debit to Delivery Expense and a credit to Cash. On the merchandiser's multi-step income statement, Gross Profit less Total Operating Expense is referred to as: operating income Deca Manufacturing purchased $12,000 of merchandise inventory on account from a vendor and was billed $200 for freight. The credit terms are 1/10, n/30. Because some of the merchandise was not what was ordered, Deca Manufacturing returned $3,000 the same day. Deca Manufacturing uses the perpetual inventory system and made payment for the merchandise, less the return, within the discount period. The journal entry to record the payment after the return within the discount period would be: accounts payable: 9,200 debitcash: 9,110 credit merchandise inventory: 90 creditThe Accounts Payable balance would be $12,000 + $200 billed for shipping - $3,000 return = $9,200. Accounts Payable is debited as it is being decreased (balance paid off). Merchandise Inventory is credited for the amount of the discount, calculated by taking $12,000 purchase - $3,000 return = $9,000 * .01 = $90. Shipping is part of Accounts Payable, but it is not discounted. Cash would be the Accounts Payable $9,200 - $90 credit to Merchandise Inventory = $9,110. Stan's Discount Floor Covering made Net Sales Revenue of $100,000 and the Cost of Goods Sold totaled $60,000. What is the gross profit percentage for this period? gp/sales revenue - 40,000/100,000= 40% A customer returned $4,000 of merchandise that was previously purchased on account before the bill was paid. The cost of goods sold was $1,500. The perpetual system is used. When recording the return of the merchandise, the seller records: dr. refund payable cr. ar 4000 dr. merch inv cr. est. returns inv 1500 Best Discount Store uses the perpetual system and had a sale on account to Julie Smith of $5,000 with terms 3/10, n/30. Ms. Smith did NOT pay within the discount period. The journal entry to record receiving payment from the sale on account would be: 5000*0.03 cash: 5,000 debit accounts receivable: 4,850 credit sales discount forfeited: 150 credit If not paid within the discount period, the full amount of $5,000 is due. Since the transaction at the time of the sale would have taken the $150 ($5,000 * .03) discount away from the debit to Accounts Receivable and credit to Service revenue, the $150 discount is forfeited. So Cash is debited for the full amount of $5,000, Sales Discounts Forfeited is credited for the discount of $150, and Accounts Receivable is credited for the amount from the original entry of $4,850. At year end, ACB Company estimates that $6,000 of sales revenue and $1,900 of merchandise inventory from the past period will be returned in the future. What is the debit and credit to record the cost of the inventory that the company expects to be returned into inventory? Estimated Returns Inventory, debit $1,900, Cost of Goods Sold, credit $1,900 On the multi-step income statement, assume that Operating Income is $10,000, Interest Expense is $1,000, and income tax rate is 30%. What is Net Income? ni= (op income - interest exp)*(1-tax rate) Sales Revenue is $300,000, Cost of Goods Sold is $200,000, and Operating Expenses are $50,000 for the period. What is Gross Profit? 100,000 Smith Company purchased inventory of $2,000 on account and uses the periodic system. The journal entry for the purchase would be: purchases: 2,000 debit accounts payable: 2,000 credit When using the periodic system, purchases are recorded in the Purchases account as a debit (instead of Merchandise Inventory) and Accounts Payable as a credit. A company has a debit balance of $10,000 in its Estimated Returns Inventory and a credit balance of $20,000 in its Refunds Payable account. If a customer returns merchandise with a sales price of $1,000 and a cost of $600, what would be the entry to record the cost of the inventory returned? dr. merch inv 600 cr. est. returns inv 600 Which of the following accounts do you typically see on a merchandising business's Balance Sheet that you do NOT see on the Balance Sheet of a service business? Merchandise inventory A service business offers a service and does not sell merchandise. Therefore, Merchandise Inventory is on the Balance Sheet as a Current Asset for a merchandising business, but not a service business. ACB Manufacturing purchased $3,000 of merchandise inventory on account. The journal entry for the purchase of merchandise inventory on account using the perpetual inventory system is: dr. merch inv cr. ap Jones Manufacturing purchased $10,000 of merchandise inventory on account from a vendor and paid a $500 freight bill. The credit terms are 2/10 or n/30. Because some of the merchandise was not needed, Jones Manufacturing returned $2,000 the same day. Jones Manufacturing uses the perpetual inventory system and made payment for the merchandise, less the return, within the discount period. What is the final cost of the merchandise inventory for Jones Manufacturing from this purchase? $8,340 Returns have to be taken away from purchases before the discount is calculated.Freight is part of the cost, but does not have a discount taken on it. To calculate use (Cost - returns) (1 - discount) + shipping cost.The formula would be (10,000- 2,000) (1 - .02) = 7,840 + 500 = 8,340. Timber Manufacturing uses the perpetual inventory system and purchased $6,000 of merchandise inventory on account. The seller prepays $300 in freight charges which were added to Timber Manufacturing's invoice. The journal entry for the purchase of merchandise on account using the perpetual inventory system is: dr. merch inv cr. ap 6300 inv+freight charges Best Discount Store uses the perpetual system for inventory and had a sale on account to Mark Watson of $3,000 with terms 1/10 or n/30. Before payment, Mr. Watson returned $1,000 of the merchandise. Mr. Watson paid within the discount period. What is the amount of cash Best Discount Store received? $1,980 The balance of Accounts Receivable after the return would be $2,000 ($3,000 - $1,000 return). The discount would be $2,000 * .01 = $20. The balance in Accounts Receivable of $2,000 - $20 discount = $1,980 Cash that is received. Purchases of merchandise inventory for the period was $500,000. In addition, the company had the following costs: Cost of Goods Sold $700,000 Purchase Returns and Allowances $50,000 Selling Expenses $75,000 Purchase Discounts $10,000 Freight In $40,000 Freight Out $30,000 What was the net cost of Purchases? 480,000 purchases-sr&a-disc+freight in A customer returned $3,000 of merchandise that was previously purchased on account before the bill was paid. The cost of goods sold was $1,300. The perpetual system is used. When recording the return of the merchandise, the seller records: dr. refunds payable 3000 cr. ar 3000 dr. merch inv cr. est returns inv 1300 Assume ABC Company has the following information for the multi-step income statement: Net Sales Revenue $11,000 Cost of Goods Sold 4,400 Interest Expense 500 Salaries Expense 700 Rent Expense 300 What is the amount of Gross Profit? 6,600 A liability account used to estimate the amount to be reimbursed to customers in the future as a result of return of merchandise. refunds payable A reduction in the amount owed by a customer that does not involve the return of merchandise. sales allowance An asset account used to approximate the cost of merchandise inventory a company will get back from a customer after a sale. estimated return inventory A reduction in the amount of revenue earned on a sale as a result of receiving an early payment from the customer. sales discount Assume that Jones Company has an unadjusted balance in Merchandise Inventory of $100,000. Due to shrinkage, a physical inventory shows that Merchandise Inventory is actually $99,000. The journal entry to record the needed adjustment would be: Cost of Goods Sold: 1,000 debit Merchandise Inventory: 1,000 credit To adjust for the lower amount of merchandise, the Cost of Goods Sold is Debited and Merchandise Inventory is credited. On December 31 of the current year, Aztec Company understated ending Merchandise Inventory by $10,000. How does this error affect the Cost of Goods Sold and the Net Income for the current year? Overstates Cost of Goods Sold and understates Net Income. Assume Jones Manufacturing begins January with 10 units of inventory that cost $10 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $11 7 Sold 11 units What is the weighted average cost per unit in the perpetual system at the time the 11 units are sold on January 7? 10.44 The weighted average cost per unit at the time of the January 7 sale would be $10.44 per unit, calculated as [(10 units $10) + (8 units $11)] / 18 total units = $10.44. When inventory costs are rising, a company may prefer to use the __________ method in the perpetual system in order to pay the lowest amount of taxes. LIFO Assume Baxter Manufacturing begins March with 25 units of inventory that cost $20 each. During March, the following purchases and goods sold were: March 15 Purchased 10 units at $22 30 Sold 30 units Using the FIFO inventory costing method and the perpetual system, what is the ending Merchandise Inventory on March 30? 35-30 5 remaining x 22 = 110 Which inventory costing method results in a higher Cost of Goods Sold to be reported on the Income Statement when inventory costs are rising? lifo Inventory turnover measures ________. how rapidly merchandise inventory is sold Ace Manufacturing purchased merchandise inventory for $8,000. At the end of the accounting period it has a market value of $7,800. Using the lower-of-cost-or-market rule, what is the journal entry to record the adjustment? dr. cogs 200 cr. merch inv 200 On December 31 of the current year, Aztec Company understated ending Merchandise Inventory by $10,000. How does this error affect the Cost of Goods Sold and the Net Income for the current year? Overstates Cost of Goods Sold and understates Net Income. Data for Shelby Company for the current year is as follows: Sales Revenue $10,000 Cost of Goods Sold: Beginning Merchandise Inventory $3,000 Net Cost of Purchases 7,000 Cost of Goods Available for Sale 10,000 Less: Ending Merchandise Inventory 2,000 Cost of Goods Sold 8,000 Gross Profit $2,000 Assume that the ending Merchandise Inventory was accidently overstated by $500. What are the correct amounts for Cost of Goods Sold and Gross Profit? Cost of Goods Sold = $8,500 Gross Profit = $1,500 Assume Jones Manufacturing begins January with 10 units of inventory that cost $10 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $11 7 Sold 11 units 15 Purchased 6 units at $12 30 Sold 15 units Using the LIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7? since the company is using LIFO, the 8 units purchased on January 5 at $11 each would be moved to Cost of Goods Sold first and you would need 3 more units (for the total sale of 11 units) from the beginning inventory of $10 per unit. As a result, Cost of Goods Sold for the sale on January 7 is (8 units $11) + (3 units $10) = $118. Which principle holds that a business's financial statements must report enough information for outsiders to make a knowledgeable decision about the company? disclosure principle Which of the following costing method results in the highest net income during a period of increasing inventory costs? cogs The Smith Manufacturing Company had inventory turnover of 9 for the current year. What is the days' sales in inventory for the current year? 365/9 = 40.56 days Assume the following beginning inventory, purchases, and sales during the month of April: April 1 Beginning Merchandise Inventory, 10 units @ $15 each 3 7 units sold 10 Purchased 9 units at $16 23 4 units sold Determine the Cost of Goods Sold using the FIFO inventory costing method and the periodic inventory system on April 30. 8 units x 16 (purchased - sold) Assume Baxter Manufacturing begins January with 11 units of inventory that cost $12 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $14 7 Sold 12 units 15 Purchased 6 units at $16 30 Sold 15 units Using the FIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7? ... Assume the following beginning inventory, purchases, and sales during the month of April: April 1 Beginning Merchandise Inventory, 10 units @ $15 each 3 7 units sold 10 Purchased 9 units at $16 23 4 units sold Determine the Cost of Goods Sold using the LIFO inventory costing method and the periodic inventory system on April 30. 174 Assume Baxter Manufacturing begins March with 25 units of inventory that cost $20 each. During March, the following purchases and goods sold were: March 15 Purchased 10 units at $22 30 Sold 30 units Using the LIFO inventory costing method and the perpetual system, what is the ending Merchandise Inventory on March 30? ... The following statement is true regarding inventory errors (overstating or understating ending Merchandise Inventory): inv erorrs will cancel out after 2 periods The Tampa Manufacturing Company had the following financial data for December 31, the end of the current year: Cost of Goods Sold $500,000 Beginning Merchandise Inventory 55,000 Ending Merchandise Inventory 45,000 What is the inventory turnover for the year? ... Bates Manufacturing purchased merchandise inventory for $10,000. At the end of the accounting period it has a market value of $8,700. Using the lower-of-cost-or-market rule, what is amount to report on the Balance Sheet as Merchandise Inventory? 8700 Assume Baxter Manufacturing begins January with 11 units of inventory that cost $12 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $14 7 Sold 12 units 15 Purchased 6 units at $16 30 Sold 15 units Using the FIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7? Since the company is using FIFO, the 11 units in beginning inventory at $12 each would be moved to Cost of Goods Sold first and you would need 1 more unit (for the total sale of 12 units) from the next purchase of $14 per unit. As a result, Cost of Goods Sold for the sale on January 7 is (11 units $12) + (1 unit $14) = $146. Data for Shelby Company for the current year is as follows: Sales Revenue $10,000 Cost of Goods Sold: Beginning Merchandise Inventory $3,000 Net Cost of Purchases 7,000 Cost of Goods Available for Sale 10,000 Less: Ending Merchandise Inventory 2,000 Cost of Goods Sold 8,000 Gross Profit $2,000 Assume that the ending Merchandise Inventory was accidently understated by $300. What are the correct amounts for Cost of Goods Sold and Gross Profit? cogs= 7700 gp= 2300 Assume Jones Manufacturing begins January with 10 units of inventory that cost $10 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $11 7 Sold 11 units 15 Purchased 6 units at $12 30 Sold 15 units Using the FIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7? Since the company is using FIFO, the 10 units in beginning inventory at $10 each would be moved to Cost of Goods Sold first and you would need 1 more unit (for the total sale of 11 units) from the next purchase of $11 per unit. As a result, Cost of Goods Sold for the sale on January 7 is (10 units $10) + (1 un