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Exam 6: Inventories and Cost of Sales

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Question 1

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When purchase costs regularly rise,the ___________________ method of inventory valuation yields the lowest gross profit and net income,providing a tax advantage.

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Last in,fi...

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Question 2

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When purchase costs regularly rise,the ___________________ method of inventory valuation yields the highest gross profit and net income.

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First in,f...

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A company reported the current month purchase and sales data for its only product and uses the perpetual inventory system.Determine the cost assigned to ending inventory and cost of goods sold using LIFO.

Using the information given below for a company that uses a perpetual inventory system,calculate the ending inventory using weighted average.

The Community Store reported the following amounts on their financial statements for Year 1,Year 2,and Year 3: It was discovered early in Year 4 that the ending inventory on December 31,Year 1 was overstated by $6,000,and the ending inventory on December 31,Year 2 was understated by $2,500.The ending inventory on December 31,Year 3 was correct.Ignoring income taxes determine the correct amounts of cost of goods sold,net income,total current assets,and equity for each of the years Year 1,Year 2,and Year 3.

A company had the following purchases during the current year: On December 31,there were 26 units remaining in ending inventory.These 26 units consisted of 2 from January,4 from February,6 from May,4 from September,and 10 from November.Using the specific identification method,what is the cost of the ending inventory?

What is the cost-to-retail ratio using the retail method? 2.What is the estimated cost of the ending inventory?

Merchandise inventory includes:

A company has the following per unit original costs and replacement costs for its inventory.LCM is applied to individual items. Part A: 50 units with a cost of $5,and replacement cost of $4.50 Part B: 75 units with a cost of $6,and replacement cost of $6.50 Part C: 160 units with a cost of $3,and replacement cost of $2.50 Under the lower of cost or market method,the total value of this company's ending inventory is:

Which of the following prescribes the use of the less optimistic amount when more than one estimate of an amount to be received or paid exists and the estimates are about equally likely?

On December 31 of the current year,Plunkett Company reported an ending inventory balance of $215,000.The following additional information is also available: ▪ Plunkett sold and shipped goods costing $38,000 to Savannah Enterprises on December 28 with shipping terms of FOB shipping point.The goods were not included in the ending inventory amount of $215,000. ▪ Plunkett purchased goods costing $44,000 on December 29.The goods were shipped FOB destination and were received by Plunkett on January 2 of the following year.The shipment was a rush order that was supposed to arrive by December 31.These goods were included in the ending inventory balance of $215,000. ▪ Plunkett's ending inventory balance of $215,000 included $15,000 of goods being held on consignment from Carole Company.(Plunkett Company is the consignee. ) ▪ Plunkett's ending inventory balance of $215,000 did not include goods costing $95,000 that were shipped to Plunkett on December 27 with shipping terms of FOB destination and were still in transit at year-end. Based on the above information,the amount that Plunkett should report in ending inventory on December 31 is:

The consistency concept:

A company's inventory records indicate the following data for the month of January: If the company uses the last-in,first-out perpetual inventory system,what is the amount of cost of goods sold for January?

Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used?

Salmone Company reported the following purchases and sales for its only product.Salmone uses a perpetual inventory system.Determine the cost assigned to cost of goods sold using LIFO.

A company reports the following information regarding its inventory. Beginning inventory: cost is $80,000;retail is $130,000 Net purchases: cost is $65,000;retail is $120,000 Sales at retail: $145,000 The year-end inventory shows $135,000 worth of merchandise available at retail prices.What is the cost of the ending inventory calculated using the retail inventory method?

A company uses the periodic inventory system and had the following activity during the current monthly period. Using the weighted-average inventory method,the company's ending inventory would be:

Goods that are in transit and were shipped FOB destination should be included in the inventory records of the _______________________.

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the FIFO periodic inventory method,what would be the cost of the ending inventory?

Goods that are in transit and were shipped FOB shipping point should be included in the inventory records of the _______________________.