A Company Had the Following Purchases During Its First Year

question 42

Multiple Choice

A company had the following purchases during its first year of operations: $$\begin{array} { | l | l | } \hline \text { January: } & \text { Purchases } \\\hline \text { February: } & 10 \text { units at } \$ 120 \\\hline \text { May: } & 20 \text { units at } \$ 130 \\\hline \text { September: } & 15 \text { units at } \$ 140 \\\hline \text { November: } & 12 \text { units at } \$ 150 \\\hline\end{array}$$ On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?

• A)$3,640.
• B)$3,280.
• C)$3,960.
• D)$3,800.
• E)$3,500.

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Definitions:

Financial Ratios

Quantitative measures derived from financial statements used to assess a company's performance, financial health, and value.

Current Ratio

An indicator measuring a corporation's potential to handle its short-term financial obligations with assets on hand.

Common Size

A financial analysis technique that expresses each line item in a financial statement as a percentage of a base figure, aiding in comparison across different financial periods or companies.

Financial Statements

Documents that provide an overview of a company's financial condition in both short and long term, including balance sheet, income statement, and cash flow statement.