Williams Company Had the Following Balances and Transactions During 2014

question 130

Multiple Choice

Williams Company had the following balances and transactions during 2014. $$\begin{array} { | l | l | } \hline \text { Beginning Inventory } & 10 \text { units at } \$ 70 \\\hline \text { June 10 } & \text { Purchased } 20 \text { units at } \$ 80 \\\hline \text { December 30 } & \text { Sold } 15 \text { units } \\\hline \text { December 31 } & \text { Replacement cost } \$ 90 \\\hline\end{array}$$ Williams maintains its records of inventory on a perpetual basis using the FIFO method. Calculate the amount of ending Merchandise Inventory at December 31, 2014 using the lower-of-cost-or-market rule.

• A) $1,200
• B) $1,360
• C) $2,040
• D) $1,020

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Definitions:

Services Performed

Tasks or work completed, particularly in the context of professional or commercial services.

Depreciation Expense

An accounting method used to allocate the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over a period.

Accumulated Depreciation

The cumulative total of the depreciation expense allocated for a physical asset from the time it was first utilized.

Equipment

Equipment consists of the tools, machinery, and other tangible assets used by a company in its operations.