FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Inventories

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

What is the amount of cost of merchandise sold for the year according to the LIFO method?

A) $1,380
B) $1,375
C) $1,510
D) $1,250

Correct Answer

verified

Show Answer

Question 72

Essay

Review LaterAdd Note

Review Later

The units of an item available for sale during the year were as follows: $\begin{array} { | l c | l | l | } \hline \text { January } & 10 & \text { Inventory } & 27 \text { units } @ \$ 90 \\\hline \text { February } & 27 & \text { Purchase } & 54 \text { units } @ \$ 98 \\\hline \text { July } & 11 & \text { Purchase } & 63 \text { units } @ \$ 106 \\\hline \text { November } & 13 & \text { Purchase } & 36 \text { units } @ \$ 115 \\\hline\end{array}$ 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.

Correct Answer

verified

a)$5,624 36 units at $115 plus 14 units ...

View Answer

Show Answer

Question 73

Multiple Choice

Review LaterAdd Note

Use the information below to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. $\begin{array} { | l | l | l | l | } \hline \text { Date } & { \text { Blankets } } & \text { Units } & \text { Cost } \\\hline { \text { May } 3 } & \text { Purchase } & 5 & \$ 20 \\\hline 10 & \text { Sale } & 3 & \\\hline 17 & \text { Purchase } & 10 & \$ 24 \\\hline 20 & \text { Sale } & 6 & \\\hline 23 & \text { Sale } & 3 & \\\hline 30 & \text { Purchase } & 10 & \$ 30 \\\hline\end{array}$ -Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the LIFO inventory cost method.

It's not unusual for large companies to use different inventory costing methods for different segments of its inventory.

Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?

Beginning inventory, purchases, and sales data for tennis rackets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO.

While taking a physical inventory, a company counts its inventory as less than the actual amount on hand. How will this error affect the income statement?

Taking a physical count of inventory

List the internal control objectives illustrated by the following: a) keeping the inventory storeroom locked b) counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records c) using subsidiary ledgers and a perpetual inventory system

A business using the retail method of inventory costing determines that merchandise inventory at retail is $2,300,000. If the ratio of cost to retail price is 55%, what is the amount of inventory to be reported on the financial statements?

Beginning inventory, purchases, and sales for an inventory item are as follows: $\begin{array}{|l|l|}\hline \text { Beginning inventory } & 150 \text { units } @ \$ 755 \\\hline \text { Sale } & 120 \text { units } \\\hline \text { First purchase } & 400 \text { units } @ \$ 785 \\\hline \text { Sale } & 200 \text { units } \\\hline \text { Second purchase } & 300 \text { units } @ \$ 805 \\\hline \text { Sale } & 290 \text { units } \\\hline\end{array}$ The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

The two most widely used methods for determining the cost of inventory are

The weighted average inventory cost flow method is the least used of the inventory costing methods.

Match each situation to its impact a-c) on the current year's net income. -Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's ending inventory.

Match each description to the appropriate cost flow assumption a-d) . -Cost flow is in the order in which the costs were incurred.

Match each situation to its impact a-c) on the current year's net income. -The beginning inventory was recorded as $10,000, when actual inventory on hand was $12,000.

Garrison Company uses the retail method of inventory costing. It started the year with an inventory that had a retail cost of $45,000. During the year, Garrison purchased an inventory with a retail sales value of $300,000. After performing a physical inventory, Garrison calculated the inventory at retail to be $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

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.

The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item, by major classification of inventory, or by the total inventory.

Match each description to the appropriate cost flow assumption a-c) . -Produces results that are similar to the specific identification method