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Exam 8: Valuation of Inventories: a Cost-Basis Approach

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Question 61

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If both purchases and ending inventory are overstated by the same amount, net income is not affected.

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Question 62

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Dollar-value LIFO method. Part A. Judd Company has a beginning inventory in year one of $700,000 and an ending inventory of $847,000. The price level has increased from 100 at the beginning of the year to 110 at the end of year one. Calculate the ending inventory under the dollar-value LIFO method. Part B. At the end of year two, Judd's inventory is $943,000 in terms of a price level of 115 which exists at the end of year two. Calculate the inventory at the end of year two continuing the use of the dollar-value LIFO method.

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Question 63

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Valuation of inventories requires the determination of all of the following except

Which inventory costing method most closely approximates current cost for each of the following:

The following information was derived from the 2014 accounting records of Perez Co.: Perez's 2014 cost of sales was

The LIFO conformity rule requires that if a company uses LIFO for tax purposes, it must also use LIFO for financial accounting purposes.

Use the following information for questions 56 and 57. During 2014, which was the first year of operations, Oswald Company had merchandise purchases of $985,000 before cash discounts. All purchases were made on terms of 2/10, n/30. Three-fourths of the items purchased were paid for within 10 days of purchase. All of the goods available had been sold at year end. -Which of the following recording procedures would result in the highest cost of goods sold for 2014?1. Recording purchases at gross amounts2. Recording purchases at net amounts, with the amount of discounts not taken shown under "other expenses" in the income statement

Which of the following methods is also referred as "parking transactions"?

How should the following costs affect a retailer's inventory valuation?

Use the following information for questions 125 through 127. Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2013. Its inventory at that date was $550,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: -What is the cost of the ending inventory at December 31, 2014 under dollar-value LIFO?

Opera Corp. uses the dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows: What is the 2013 inventory balance using dollar-value LIFO?

Web World began using dollar-value LIFO for costing its inventory last year. The base year layer consists of $400,000. Assuming the current inventory at end of year prices equals $552,000 and the index for the current year is 1.10, what is the ending inventory using dollar-value LIFO?

Milford Company had 500 units of "Tank" in its inventory at a cost of $4 each. It purchased, for $2,800, 300 more units of "Tank". Milford then sold 400 units at a selling price of $10 each, resulting in a gross profit of $1,600. The cost flow assumption used by Milford

Use the following information for questions 96 and 97. Winsor Co. records purchases at net amounts. On May 5 Winsor purchased merchandise on account, $40,000, terms 2/10, n/30. Winsor returned $3,000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. -By how much should the account payable be adjusted on May 31?

Use the following information for questions 103 through 106. Transactions for the month of June were: -Assuming that perpetual inventory records are kept in units only, the ending inventory on an average-cost basis, rounded to the nearest dollar, is

The pricing of issues from inventory must be deferred until the end of the accounting period under the following method of inventory valuation:

Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?

Under what circumstances should a company with high rate of return on sales consider the inventory sold?

Milford Company had 400 units of "Tank" in its inventory at a cost of $6 each. It purchased 600 more units of "Tank" at a cost of $9 each. Milford then sold 700 units at a selling price of $15 each. The LIFO liquidation overstated normal gross profit by

Feine Co. accepted delivery of merchandise which it purchased on account. As of December 31, Feine had recorded the transaction, but did not include the merchandise in its inventory. The effect of this on its financial statements for December 31 would be