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Exam 6: Inventories

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Question 121

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The inventory turnover is computed by dividing cost of goods sold by

A) beginning inventory.
B) ending inventory.
C) average inventory.
D) 365 days.

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Question 122

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Shellhammer Company's inventory records show the following data for the month of September: A physical inventory on September 30 shows 200 units on hand. Calculate the value of the ending inventory and cost of goods sold if the company uses weighted average inventory costing and a periodic inventory system. Round cost per unit to 2 decimal places and ending inventory and cost of goods sold to the nearest dollar.

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Question 123

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Netta Shutters has the following inventory information. A physical count of merchandise inventory on November 30 reveals that there are 90 units on hand. Assume a periodic inventory system is used. Cost of goods sold (rounded to the nearest dollar) under the average-cost method is

Under the LCNRV approach, the net realizable value is the

Frank Jeffries, a new employee of Stine Company, recorded $1,000 in consigned goods received as part of the firm's inventory. The goods were received one day after the end of the fiscal period, but Frank reasoned that the goods should be included in inventory sooner because Stine paid the freight. The mistake was brought to his attention by the purchasing department who said the goods should not have been recorded as Stine inventory at all. Frank told Sara Janik, the purchasing supervisor, that nobody needed to worry, because the mistake would cancel itself out the following month. In Frank's opinion, there was no reason to get everyone excited over nothing, especially since it was monthly, and not annual, financial statements that were affected. Sara Janik has reported the problem to the accounting department. Required: You are Frank's supervisor. Write a memo to Frank explaining why the error should have been corrected.

Talkington Rae Company reports goods available for sale at cost, $76,800. Beginning inventory at retail is $40,000 and goods purchased during the period at retail were $80,000. Sales for the period amounted to $85,000. Instructions Determine the estimated cost of the ending inventory using the retail inventory method.

Lester Company sells many products. Hackenberry is one of its popular items. Below is an analysis of the inventory purchases and sales of Hackenberry for the month of March. Lester Company uses the periodic inventory system. Instructions (a) Using the FIFO assumption, calculate the amount charged to cost of goods sold for March. (Show computations) (b) Using the weighted average method, calculate the amount assigned to the inventory on hand on March 31. (Show computations) (c) Using the LIFO assumption, calculate the amount assigned to the inventory on hand on March 31. (Show computations)

Naughty Dog Disc Golf Show uses the lower-of-cost-or net realizable value basis for its inventory. The following data are available at December 31 Determine the amount of the ending inventory by applying the lower- of- cost- or-net realizable value basis.

Under a consignment arrangement, the

In a period of falling prices, the LIFO method results in a lower cost of goods sold than the FIFO method.

Goods out on consignment should be included in the inventory of the consignor.

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

The LIFO inventory method assumes that the cost of the latest units purchased are

GAAP's provision for ownership of goods (goods-in-transit or consigned goods), as well as which costs to include in inventory, as compared to IFRS are: IFRS:

A problem with the specific identification method is that