Moon Uses a Periodic Inventory System with the Last-In First-Out

question 31

Multiple Choice

Moon uses a periodic inventory system with the last-in first-out method of cost assignment.The following data are available: $\begin{array}{ccc}\text { Date }& \text { Units Unit }& \text { Cost \$}\\\text { Jan } 6 \text { Beginning inventory } & 1000 & 10 \\15 \text { Purchase } & 2000 & 11 \\26 \text { Purchase } & 1000 & 12\\& 4000 \\31 \text { Sale } & 1000&20\\\text { Closing inventory }&3000\end{array}$ What is the value of closing inventory at 31 January?

• A)$33 000
• B)$30 000
• C)$32 000
• D)$60 000

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Definitions:

Unearned Revenues

Income received by a company for goods or services yet to be delivered or performed.

Liability Uncertainty

Liability uncertainty involves not knowing the exact amount or timing of future outflows due to existing obligations.

Sales Taxes Payable

Current liabilities on a company’s balance sheet, representing taxes collected from customers on behalf of governmental authorities which are yet to be remitted.

Credited

An accounting entry that increases a liability or equity account, or decreases an asset or expense account.