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Exam 6: Inventories

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Question 101

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The following lots of Commodity D were available for sale during the year. Use this information to answer the questions that follow. The firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year.​ -What is the ending inventory balance at the end of the year rounded to nearest dollar using the average cost method?

A) $1,685
B) $1,575
C) $1,805
D) $3,705

E) B) and C)
F) B) and D)

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Question 102

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Basic inventory data for April 30 are presented below for a business that employs the lower-of-cost-or-market basis of inventory valuation to each category. (a)Complete the table.(b)Determine the amount of reduction in the inventory at April 30 attributable to market decline.

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(a) (b) $...

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Question 103

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The following lots of Commodity Z were available for sale during the year. Use this information to answer the questions that follow. -The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year rounded to nearest dollar according to the average cost method?

Match each situation to its impact (a-c) on the current year's net income. a.Net income for the current year will be overstated.b.Net income for the current year will be understated.c.There will be no error effect on net income. -The beginning inventory was recorded as $10,000, when actual inventory on hand was $12,000.

During the taking of its physical inventory on December 31, Almond Supplies Company incorrectly counted its inventory as $545,000 instead of the correct amount of $554,000. Indicate the balance sheet effects of the error on inventory, current assets, total assets, and stockholders' equity. Also indicate the income statement effects of the error on cost of goods sold, gross profit, and net income.

The units of an item available for sale during the year were as follows: There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost by (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method. Show your work.

Based on the following information, compute (a) inventory turnover; (b) average daily cost of goods sold using a 365 day year; and (c) number of days' sales in inventory.​ Cost of goods sold $195,640 Inventory: Beginning of year 20,500 End of year 18,628

Determine the total value of the merchandise using net realizable value.​

During August, the first month of the fiscal year, sales totaled $875,000 and the cost of merchandise available for sale totaled $850,000. Estimate the cost of the inventory as of August 31, based on an estimated gross profit rate of 45%.

The units of Product Green-2 available for sale during the year were as follows: There are 17 units of the product in the physical inventory at September 30. The periodic inventory system is used. Determine the cost of goods sold by (a) FIFO, (b) LIFO, and (c) average cost methods.

Beginning inventory, purchases, and sales for an inventory item are as follows: Assuming a perpetual inventory system and the first-in, first-out method, determine (a) the cost of the goods sold for the September 30 sale and (b) the inventory on September 30.

Inventory errors, if not discovered, will self-correct within two years.

Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. -Use the information in the table to answer this question. If Addison uses LIFO, the September 17 cost of goods sold would be:

Assume that three identical units of merchandise were purchased during October, as follows: -One unit is sold on October 31 for $28. Using the table provided, determine cost of goods sold under the average cost method.​

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations. -Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the LIFO perpetual inventory method.

During periods of decreasing costs, the use of the LIFO method of costing inventory will result in a lower amount of net income than would result from the use of the FIFO method.

A purchase order establishes an initial record of the receipt of the inventory.

During periods of increasing costs, the use of the FIFO method of costing inventory will yield an inventory amount for the balance sheet that is higher than LIFO would produce.