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accounts data bank

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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.

 

Paper#45093 | Written in 18-Jul-2015

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