Graham Company Uses a Periodic Inventory System

question 171

Multiple Choice

Graham Company uses a periodic inventory system. Details for the inventory account for the month of January 2014 are as follows: An end of the month (1/31/14) inventory showed that 120 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

• A) $1,376
• B) $1,424
• C) $2,800
• D) $3,000

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Definitions:

Par Value

The nominal or face value of a stock or bond as stated by the issuing company.

Cash Interest Payment

The actual cash paid by a borrower to a lender or bondholder as compensation for the use of borrowed money, usually at set intervals.

Bond Exchange

The process of trading bonds in the financial market, where investors buy and sell debt securities issued by entities like governments and corporations.

Market Rate of Interest

The prevailing rate of interest observed in the marketplace for loans and investments.