Exhibit 8-1 Walters Co

question 61

Multiple Choice

Exhibit 8-1 Walters Co.purchased raw materials with a catalog price of $70, 000 on March 2, 2010.Credit terms of 4/20, n/60 applied.If Walters pays for the purchase on March 18, 2010, calculate what amount is recorded for inventory on March 2, 2010, using the method given.
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Refer to Exhibit 8-1.Walters uses a perpetual inventory system and the gross price method.

• A)$42, 000
• B)$56, 000
• C)$67, 200
• D)$70, 000

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Definitions:

Call Contract

A financial derivative agreement giving the buyer the right, but not the obligation, to buy an underlying asset at a specified price before a specified date.

Break Even

The point at which total cost and total revenue are equal, meaning there is no net loss or gain.

Stock Price

The cost of purchasing a share of a company, fluctuating based on market conditions, company performance, and investor sentiment.

Maximum Loss

The highest possible amount an investment might lose.