Circle Ltd Manufactures Polystyrene Trays for a Variety of Purposes

question 51

Multiple Choice

Circle Ltd manufactures polystyrene trays for a variety of purposes.The following information relates to the production of the medium trays used by meat packing companies for the period ended 30 June 2003. The company uses a perpetual inventory system.The net realisable value per extra large cardboard box is $0.17 at the end of the period.What are the costs of sales and the value of ending inventory for Rectangle Ltd assuming the FIFO cost-flow assumption is used?

• A) Cost of sales: $633.80 Ending inventory: $83
• B) Cost of sales: $654.55 Ending inventory: $62.25
• C) Cost of sales: $657.19 Ending inventory: $59.61
• D) Cost of sales: $633.80 Ending inventory: $70.55
• E) None of the given answers.

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Definitions:

Cash Equivalents

Short-term investments with original maturities of three months or less that are readily convertible to cash and whose value is unlikely to change.

Highly Liquid

Assets that can be easily converted into cash with minimal impact on their value.

Direct Method

A method of presenting the operating activities section of the statement of cash flows that reports components of cash flows from operating activities as gross receipts and gross payments.