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Exam 7: Inventories

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Question 41

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​Which of the following will be the same amount regardless of the cost flow assumption adopted?

A) ​number of items ordered
B) ​gross profit
C) ​cost of goods sold
D) ​ending merchandise inventory

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

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Question 42

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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.

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.

D) None of the above
E) B) and C)

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Question 43

Multiple Choice

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Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB destination 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.

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.

Which document establishes an initial record of the receipt of inventory?

Which of the following is used to analyze the efficiency and effectiveness of inventory management?

Match each description to the appropriate cost flow assumption (a-c) . -Never results in either the highest or lowest possible net income

Match each description to the appropriate cost flow assumption (a-c) . -Cost of the latest purchases are assigned to ending inventory

Taking a physical count of inventory

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

Use the information below to answer the following questions. The following lots of a particular commodity were available for sale during the year: ? $\begin{array}{ll}\text { Beginning inventory } & 10 \text { units at } \$ 30 \\\text { First purchase } & 25 \text { units at } \$ 32 \\\text { Second purchase } & 30 \text { units at } \$ 34 \\\text { Third purchase } & 10 \text { units at } \$ 35\end{array}$ ? -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 amount of inventory at the end of the year according to the FIFO method?

Use the information below to answer the following questions. The following lots of a particular commodity were available for sale during the year: ? $\begin{array}{ll}\text { Beginning inventory } & 10 \text { units at } \$ 30 \\\text { First purchase } & 25 \text { units at } \$ 32 \\\text { Second purchase } & 30 \text { units at } \$ 34 \\\text { Third purchase } & 10 \text { units at } \$ 35\end{array}$ ? -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 amount of inventory at the end of the year according to the LIFO method?

The units of Manganese Plus available for sale during the year were as follows:? $\begin{array} { l l l l l } \text { Mar. 1 } & \text { Inventory } & 16 \text { units } & @ \$ 30 & \$ 480 \\\text { June } 16 & \text { Purchase } & 30 \text { units } & @ \$ 35 & 1,050 \\\text { Nov. } 28 & \text { Purchase } & \underline { 45 } \text { units } & @ \$ 39 & \underline { 1,755 } \\& & { \underline { \mathbf { 9 1 } } \text { units } } & & \underline { \mathbf { \$ 3 , 2 8 5 } }\end{array}$ There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the inventory cost by the (a) FIFO, (b) LIFO, and (c) average cost methods.

Generally, the lower the days' sales in inventory, the better.

Match each description to the appropriate cost flow assumption (a-c) . -Assigns the same value to all inventory units

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

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

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September: $\begin{array} { r l l } \text { Sept. } 1 & \text { Inventory } & 20 \text { units at } \$ 20 \\ 4 & \text { Sale } & 10 \text { units } \\ 10 & \text { Purchase } & 30 \text { units at } \$ 25 \\ 17 & \text { Sale } & 20 \text { units } \\ 30 & \text { Purchase } & 10 \text { units at } \$ 30 \end{array}$ -The inventory data for an item for November are: $\begin{array} { r l l } \text { Nov. } 1 & \text { Inventory } & 20 \text { units at } \$ 19 \\4 & \text { Sale } & 10 \text { units } \\10 & \text { Purchase } & 30 \text { units at } \$ 20 \\17 & \text { Sale } & 20 \text { units } \\30 & \text { Purchase } & 10 \text { units at } \$ 21\end{array}$ Using a perpetual system, what is the cost of merchandise sold for November if the company uses LIFO?

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations.?? May 1 Purchased 500 units $@ \$ 25.00$ each. 4 Purchased 300 units $@ \$ 24.00$ each. 6 Sold 400 units $@ \$ 38.00$ each. 8 Purchased 700 units $@ \$ 23.00$ each. 13 Sold 450 units $@ \$ 37.50$ each. 20 Purchased 250 units $@ \$ 25.25$ each. 22 Sold 275 units $@ \$ 36.00$ each. 27 Sold 300 units $@ 37.00$ each. 28 Purchased 550 units $@ \$ 26.00$ each. 30 Sold 100 units $@ \$ 39.00$ each. Calculate total sales, cost of merchandise sold, gross profit, and ending inventory using each of the following inventory methods: 1. FIFO perpetual 2. FIFO periodic 3. LIFO perpetual 4. LIFO periodic 5. Average cost periodic (round average to nearest cent)