Storme Shutters Has the Following Inventory Information A Physical Count of Merchandise Inventory on November 30 Reveals

question 55

Multiple Choice

Storme Shutters has the following inventory information. $$\begin{array} { r l r } \text { Nov. } 1 & \text { Inventory } & 30 \text { units } @\$ 8.00 \\8 & \text { Purchase } & 120 \text { units }@\$ 8.30 \\17 & \text { Purchase } & 60 \text { units } @ \$ 8.70 \\25 & \text { Purchase } & 90 \text { units }@\$ 8.80\end{array}$$ A physical count of merchandise inventory on November 30 reveals that there are 80 units on hand. Assume a periodic inventory system is used. Cost of goods sold (rounded to the nearest dollar) under the average-cost method is

• A) $1758.
• B) $1870.
• C) $1859.
• D) $1812.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, where estimated uncollectible accounts are expensed, adjusting the accounts receivable balance.

Accounts Receivable

Outstanding payments due to a company from its customers for delivered or utilized goods and services.

Bad Debt Expense

An estimate of loss due to customers' inability to make payments, recognized as an expense in accounting.

Allowance Method

An accounting technique used to estimate and account for doubtful accounts, providing an allowance for accounts receivable that may not be collectible.