Page 1 of 9 Name ________________________ Date .docx

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Name: __________________________ Date: _____________
You must complete both Part 1 (Wiley Plus) & Part 2 of Quiz 2
20 Questions: 12 MC Questions; 7 Problems; 1 essay
Ch 5 – 6 - 7 … Timed Exam: 3 hours
UMUC – ACCT 220 Due April 24, 2013
This exam is to be completed without the assistance of any
other person.
You may use only the resources provided by your instructor for
this class.
** Save this file and include your name in the file name:
Steve_Harvey_Quiz_2
You may create an Excel and / or Word File for your work.
Please verify that each page prints out
formatted with your name and page number on the page. Excel
files should show gridlines.
Excel ‘page format’ has options for grid lines (sheet) and
headers/footers.
At a minimum, use print preview so you can see how the work

will print out.
I pledge on my honor that I have not given or received any
unauthorized assistance on this
examination. In addition, I pledge that I will not disclose to, or
discuss the contents of this
examination with, students who have not taken it.
_____________________________________________________
____________________
Signed
12 MC (place answer on the line); 1 essays , 7 problem
presentation questions (may require JEs or
financial statement presentations)
NOTE: some problems have several ‘calculation’ presentations
or tasks
100 total points; 100 points = 100%
For all questions, assume no other transactions or activities
have taken place during the period except
as noted
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Prepare and present calculations for partial credits for questions
with calculations and presentations.
Name: __________________________ Date: _____________
1. The IASB and FASB are working on a converged statement
of financial position using
the headings of
A) assets, liabilities, and owner's equity. Answer:
________
B) revenues and expenses.
C) assets, liabilities, revenues, expenses and owner's equity.
D) operating, investing, and financing.
2. The only acceptable cost flow assumptions under IFRS are
A) FIFO and LIFO. Answer:
________
B) FIFO and average.
C) LIFO and average.
D) FIFO, LIFO and average.

3. On July 9, Serta Company sells goods on credit to Walmart
Company for $3,000, terms
1/10, n/60. Serta receives payment on July 18. The entry by
Serta on July 18 is:
Answer: ________
A) Cash 3,000
Accounts Receivable 3,000
B) Cash 3,000
Sales Discounts 30
C) Cash 2,970
Sales Discounts 30
D) Cash 3,030
Cash 30

4. In a perpetual inventory system, the Cost of Goods Sold
account is used
A) only when a cash sale of merchandise occurs.
Answer: ________
B) only when a credit sale of merchandise occurs.
C) only when a sale of merchandise occurs.
D) whenever there is a sale of merchandise or a return of
merchandise sold.
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5. As a result of a thorough physical inventory, Hallmark
Company determined that it had
inventory worth $270,000 at December 31, 2012. This count did
not take into
consideration the following facts: American Greetings
Consignment currently has goods
worth $47,000 on its sales floor that belong to Hallmark but are
being sold on

consignment by American Greetings. The selling price of these
goods is $75,000.
Hallmark purchased $22,000 of goods that were shipped on
December 27. FOB
destination, that will be received by Hallmark on January 3.
Determine the correct
amount of inventory that Hallmark should report.
A) $270,000. Answer:
________
B) $290,000.
C) $317,000.
D) $337,000.
6. Borders Bookstore had 500 units on hand at January 1,
costing $18 each. Purchases and
sales during the month of January were as follows:
Date Purchases Sales
Jan. 14 375 @ $28
17 250 @ $20
25 250 @ $22

29 260 @ $32
Borders does not maintain perpetual inventory records.
According to a physical count,
365 units were on hand at January 31.
The cost of the inventory at January 31, under the FIFO method
is:
Answer: ________
A) $6,570.
B) $7,300.
C) $7,800.
D) $8,030.
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7. Borders Bookstore had 500 units on hand at January 1,
costing $18 each. Purchases and
sales during the month of January were as follows:

Date Purchases Sales
Jan. 14 375 @ $28
17 250 @ $20
25 250 @ $22
29 260 @ $32
Borders does not maintain perpetual inventory records.
According to a physical count,
365 units were on hand at January 31.
The cost of the inventory at January 31, under the LIFO method
is:
Answer:
________
A) $6,570.
B) $7,300.
C) $7,800.
D) $8,030.

8. A company just starting business made the following four
inventory purchases in June:
June 1 150 units $ 390
June 10 200 units 585
$2,115
A physical count of merchandise inventory on June 30 reveals
that there are 200 units
on hand. Using the LIFO inventory method, the value of the
ending inventory on June
30 is
Answer:
________
A) $536.
B) $668.
C) $1,447.
D) $1,564.

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$2,115
on hand. Using the FIFO inventory method, the amount
allocated to cost of goods sold
for June is
Answer:
________
A) $536.

B) $668.
C) $1,447.
D) $1,564.
$2,115
on hand. Using the average-cost method, the amount allocated
to the ending inventory
on June 30 is
A) $536. Answer:
________

B) $604.
C) $668.
D) $1,511.
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$2,115
on hand.
The inventory method which results in the highest gross profit

for June is
Answer:
________
A) the FIFO method.
B) the LIFO method.
C) the weighted average unit cost method.
D) not determinable.
12. Evergreen Company's inventory records show the following
data:
Units Unit Cost
Inventory, January 1 5,000 $9.20
Purchases: June 18 4,500 8.00
November 8 3,000 7.00
A physical inventory on December 31 shows 2,000 units on
hand. Evergreen sells the
units for $13 each. The company has an effective tax rate of
20%. Evergreen uses the
periodic inventory method. The weighted-average cost per unit

is
Answer: ________
A) $8.00.
B) $8.01.
C) $8.24.
D) $9.30.
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13. The Costco Company accumulates the following cost and
market data at December 31,
2012:
Inventory Categories Cost Data Market Data
Camera $11,000 $9,900
Camcorders 7,800 8,500
DVDs 14,000 12,000
Record the Journal Entry for necessary adjustments using the

lower-of-cost-or-market
value of the inventory method as of December 31, 2012.
14. At December 31, 2012, the following information was
available for Westinghouse
Company: ending inventory $22,600; beginning inventory
$21,400; cost of goods sold
$171,000; and sales revenue $430,000.
Calculate the inventory turnover ratio and days in inventory for
Westinghouse.
15. The following information is available for LiteBrite
Company:
Beginning inventory 600 units at $4
First purchase 900 units at $6
Second purchase 500 units at $7.20
Assume that LiteBrite uses a periodic inventory system and that
there are 700 units left
at the end of the month.

Instructions
Compute the cost of ending inventory under the
(a) FIFO method.
(b) LIFO method.
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16. The following information is available for LiteBrite
Company:
Beginning inventory 600 units at $4
First purchase 900 units at $6
Second purchase 500 units at $7.20
Assume that LiteBrite uses a periodic inventory system and that
there are 700 units left
at the end of the month.
Instructions
Compute each of the following under the average-cost method:

(a) Cost of ending inventory.
(b) Cost of goods sold.
17. Walgreen Pharmacy reported cost of goods sold as follows:
2012 2013
Beginning inventory $ 54,000 $ 64,000
Cost of goods purchased 847,000 891,000
Cost of goods available for sale 901,000 955,000
Ending inventory 64,000 55,000
Cost of goods sold $837,000 $900,000
Lincoln, the accountant, made two errors:
(1) 2012 ending inventory was overstated by $7,000.
(2) 2013 ending inventory was understated by $16,000.
Instructions
Assuming the errors had not been corrected, indicate the dollar
effect that the errors had
on the items appearing on the financial statements listed below.
Also indicate if the

amounts are overstated (O) or understated (U).
2012 2013
Overstated/ Overstated/
Amount Understated Amount Understated
Total assets $_________ _______ $_________ _______
Owner's equity
$_________
_______
$_________
_______
Cost of goods sold
$_________
_______

$_________
_______
Net income
$_________
_______
$_________
_______
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18. Wyman’s Department Store prepares monthly financial
statements but only takes a
physical count of merchandise inventory at the end of the year.
The following
information has been developed for the month of July:

At Cost At Retail
Beginning inventory $ 30,000 $ 50,000
Merchandise purchases 99,000 150,000
The net sales for July amounted to $142,000.
Instructions
Use the retail inventory method to estimate the ending inventory
at cost for July. Show
all computations to support your answer.
19. FIFO and LIFO are the two most common cost flow
assumptions made in costing
inventories. The amounts assigned to the same inventory items
on hand may be different
under each cost flow assumption. If a company has no
beginning inventory, explain the
difference in ending inventory values under the FIFO and LIFO
cost bases when the
price of inventory items purchased during the period have been
(1) increasing, (2)
decreasing, and (3) remained constant.

20. Compute the lower-of-cost-or-market valuation (and prepare
any necessary adjusting
entries as of March 31, 2013) for DeBartolo Company's total
inventory based on the
following:
Inventory Categories Cost Data Market Data
A as of 3/31/2013 $18,000 $16,900
B as of 3/31/2013 13,900 14,600
C as of 3/31/2013 21,000 20,500

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