29 Jun Question Wakefield Company us
Question
Wakefield Company uses a perpetual inventory system. In August, it sold 2,000 units from its LIFO-base inventory, which had originally cost $35 per unit. The replacement cost is expected to be $45 per unit. The company is planning to reduce its inventory and expects to replace only 1,500 of these units by December 31, the end of its fiscal year. The company replaced 1,500 units in November at an actual cost of $50 per unit.
1. Based on the preceding information, in the entry in August to record the sale of the 2,000 units:
A. Cost of Goods Sold will be debited for $70,000.
B. Inventory will be credited for $85,000.
C. Excess of Replacement Cost over LIFO Cost of Inventory Liquidation will be credited for $15,000.
D. Excess of Replacement Cost over LIFO Cost of Inventory Liquidation will be credited for $67,000.
2. Based on the preceding information, in the entry to record the replacement of the 1,500 units in November, Cost of Goods Sold will be debited for:
A. $52,500.
B. $22,500.
C. $15,000.
D. $7,500.
3. Based on the preceding information, in the entry to record the replacement of the 1,500 units in November, Inventory will be debited for:
A. $52,500.
B. $75,000.
C. $67,500.
D. $60,000.
4. Based on the preceding information, in the entry to record the replacement of the 1,500 units in November, Accounts Payable will be credited for:
A. $67,500.
B. $75,000.
C. $62,500.
D. $60,000.
5. Assume that the replacement did not happen in November. In December, the company decided not to replace any of the 1,500 units. The entry required on December 31 to eliminate valuation accounts related to the inventory that will not be replaced will include:
A. a debit to Excess of Replacement Cost over LIFO Cost of Inventory Liquidation for $22,500.
B. a credit to Cost of Goods Sold for $15,000.
C. a debit to Inventory for $70,000.
D. a debit to Inventory for $15,000.
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