The Singh Computer Shop Begins Operations on June 1 and Uses

question 173

Multiple Choice

The Singh Computer Shop begins operations on June 1 and uses a periodic inventory system. During June, the company had the following purchases and sales for its Model 10 Fastback Computer System: On June 30 an inventory count showed there were 8 units on hand.
-Using the average cost formula, the amount allocated to the ending inventory on June 30 is

• A) $19,323.
• B) $12,077.
• C) $20,800.
• D) $18,400.

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Definitions:

Accruals

Accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.

Unrecorded Expense

A cost or liability that has been incurred but not yet documented or included in the financial records or statements of a company.

Unrecorded Revenue

Earnings from completed transactions or delivered goods/services that have not yet been documented in the financial accounts.

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used in the United States for financial reporting.