A Company Uses the Periodic Inventory System and Had the Following

question 71

Multiple Choice

A company uses the periodic inventory system and had the following activity during the
Current monthly period.
$$\begin{array} { | l | l | r | } \hline \text { November 1: } & \text { Begnning inventory } & 100 \text { units } @ \$ 20 \\\hline \text { November 5: } & \text { Purchased } & 100 \text { units } @ \$ 22 \\\hline \text { November 8: } & \text { Purchased } & 50 \text { units } @ \$ 23 \\\hline \text { November 16: } & \text { Sold } & 200 \text { units } @\$ 45 \\\hline \text { November 19: } & \text { Purchased } & 50 \text { units } @ \$ 25\\\hline\end{array}$$
Using the weighted-average inventory method,the company's ending inventory would be reported at:

• A)$2,000
• B)$2,200
• C)$2,250
• D)$2,400
• E)$4,400

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Definitions:

Bad Debts Expense

Expenses linked to accounts receivable that a firm anticipates will not be collected.

Allowance Method

An accounting technique used to account for bad debts, which estimates uncollectible accounts receivable and creates a provision for them.

Accounts Receivable

Financial dues from customers to an organization for products or services that have been dispensed but not reimbursed.

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of a company's receivables that may not be collectible.