A Company Has a Beginning Inventory of $40,000 and Purchases

question 7

Multiple Choice

A company has a beginning inventory of $40,000 and purchases during the year of $110,000. The beginning inventory consisted of 3,000 units and 7,000 units were purchased during the year. The average cost per unit is:

• A) $11.00.
• B) $13.33.
• C) $15.00.
• D) $15.71.

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Definitions:

Retained Earnings Statement

A financial statement that outlines the changes in retained earnings for a specific period.

Treasury Stock

Treasury stock consists of shares that were issued and subsequently reacquired by the issuing corporation, reducing the amount of outstanding stock on the open market.

Voluntary Restriction

Voluntary restriction refers to limitations or constraints that an organization chooses to impose on itself, often related to its operations or the use of its assets, not mandated by external regulations.

Retained Earnings

The accumulated net income of a company that is retained and not distributed to shareholders as dividends.