A Firm Purchased 50 Units of Materials with a Unit

question 52

Multiple Choice

A firm purchased 50 units of materials with a unit price of $1.30 on June 1. On June 15, the firm purchased 50 units with a unit price of $1.20. If the firm uses the LIFO method of inventory pricing, the total cost of 65 units issued on June 20 would be

• A) $83.00.
• B) $79.50.
• C) $78.00.
• D) $84.50. (50 x 1.20) + (15 x 1.30) = 79.50.

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Definitions:

Straight-line Amortization

The method of gradually reducing the cost of an intangible asset over its useful life in a uniform manner.

Market Value Method

The market value method is a valuation method used to assess the value of an asset based on its current market price.

Bond Conversion

The process of converting a convertible bond into a specific number of shares of the issuer's common stock.

Conversion Privilege

A feature of certain securities that allows the holder to convert them into a different type of security, typically common stock, under specific conditions.