Wakefield Company Uses a Perpetual Inventory System

question 61

Multiple Choice

Wakefield Company uses a perpetual inventory system.In August,it sold 2,000 units from its LIFO-base inventory,which had originally cost $35 per unit.The replacement cost is expected to be $45 per unit.The company is planning to reduce its inventory and expects to replace only 1,500 of these units by December 31,the end of its fiscal year.The company replaced 1,500 units in November at an actual cost of $50 per unit.
-Based on the preceding information,in the entry to record the replacement of the 1,500 units in November,Cost of Goods Sold will be debited for:

• A)$52,500.
• B)$22,500.
• C)$15,000.
• D)$7,500.

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Definitions:

Trade Agreement

A formal arrangement between two or more countries to regulate tariffs, trade barriers, and other trade-related issues.

NAFTA

The North American Free Trade Agreement, a treaty between Canada, Mexico, and the United States that established a trilateral trade bloc in North America.

GATT

The General Agreement on Tariffs and Trade, a legal agreement between countries to promote international trade by reducing or eliminating trade barriers such as tariffs and quotas.

FTAA

The Free Trade Area of the Americas, a proposed agreement to eliminate or reduce trade barriers among all countries in the Americas, excluding Cuba.