FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Inventories

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 81

Essay

Review LaterAdd Note

Review Later

Assume that three identical units of merchandise are purchased during October, as follows:?? $\begin{array} { | l | c | c | c | c | } \hline & & & \text { Units } & \text { Cost } \\\hline \text { Oct. } & 5 & \text { Purchase } & 1 & \$ 5 \\\hline & 12 & \text { Purchase } & 1 & 13 \\\hline & 28 & \text { Purchase } & \underline { 1 } & \underline { 15 } \\\hline \text { Total }&&&\underline{3}&\underline{\$33}\\\hline\end{array}$ Assume one unit is sold on October 31 for $28. Determine cost of merchandise sold, gross profit, and ending inventory under the FIFO method.

Correct Answer

verified

\[\begin{array} { | l | c | }
\hline & ...

View Answer

Show Answer

Question 82

Essay

Review LaterAdd Note

Review Later

The following data regarding purchases and sales of a commodity were taken from the related perpetual inventory account:? $\begin{array} { r l l } \text { June } 1 & \text { Balance } & 25 \text { units at } \$ 60 \\6 & \text { Sale } & 20 \text { units } \\8 & \text { Purchase } & 20 \text { units at } \$ 61 \\16 & \text { Sale } & 10 \text { units } \\20 & \text { Purchase } & 20 \text { units at } \$ 62 \\23 & \text { Sale } & 25 \text { units } \\30 & \text { Purchase } & 15 \text { units at } \$ 63\end{array}$ Calculate the cost of the ending inventory at June 30, using (a) the first-in, first-out (FIFO) method and (b) the last-in, first-out (LIFO) method. Identify the quantity, unit price, and total cost of each lot in the inventory.

Correct Answer

verified

\[\begin{array}{l}
\begin{array} { r l r...

View Answer

Show Answer

Question 83

Essay

Review LaterAdd Note

The beginning inventory and purchases of an item for the period were as follows:? $\begin{array}{ll}\text { Beginning inventory } & 6 \text { units at } \$ 70 \text { each } \\\text { First purchase } & 10 \text { units at } \$ 75 \text { each } \\\text { Second purchase } & 18 \text { units at } \$ 80 \text { each } \\\text { Third purchase } & 10 \text { units at } \$ 90 \text { each }\end{array}$ The company uses the periodic system, and there were 15 units in the inventory at the end of the period. Determine the cost of the 15 units in the inventory by each of the following methods, presenting details of your computations: (a) first-in, first-out; (b) last-in, first-out; (c) average cost. Do not round your intermediate calculations. Round your final answer to two decimal places.

When merchandise sold is assumed to be in the order in which the purchases were made, the company is using

For the year ended December 31, Depot Max's cost of merchandise sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max's days' sales in inventory is closest to

Ending inventory is made up of the oldest purchases when a company uses

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Safeguarding inventory and proper reporting of the inventory in the financial statements are the reasons for controlling the inventory.

Match each description to the appropriate document used for inventory control (a-c) . -Establishes an initial record of the receipt of inventory

Inventory turnover measures the length of time it takes to acquire, sell, and replace the inventory.

If a company uses a periodic inventory system, the gross profit method can be used to estimate inventory for monthly or quarterly statements.

Beginning inventory and purchases and sales data for T-shirts are as follows:? $\begin{array}{rrllll}Apr.&3 & \text { Inventory } & 24 \text { units } & @ & \$ 10 \\&11 & \text { Purchase } & 26 \text { units } & @ & \$ 12 \\&14 & \text { Sale } & 36 \text { units } & & \\&21 & \text { Purchase } & 18 \text { units } & @ & \$ 15 \\&25 & \text { Sale } & 20 \text { units } & &\end{array}$ Assuming the business maintains a periodic inventory system, calculate the cost of merchandise sold and ending inventory under the following assumptions: a. FIFO b. LIFO c. Average cost (round cost of merchandise sold and ending inventory to the nearest dollar)

Match each description to the appropriate cost flow assumption (a-c) . -Rarely used with a perpetual inventory system

Unsold consigned merchandise should be included in the consignee's inventory.

A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are not in the possession of the consignor.

Control of inventory should begin as soon as the inventory is ordered. Which of the following internal control steps is not done to meet this goal?

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

If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on owner's equity?

Complete the chart, indicating whether LIFO or FIFO would give the highest and lowest amounts for each item, assuming a period of increasing costs. $\begin{array} { | l | l | l | } \hline & \text { Highest Amount } & \text { Low est Amount } \\\hline \text { Cost of merchandise sold } & & \\\hline \text { Gross profit } & & \\\hline \text { Net income } & & \\\hline \text { Ending merchandise inventory } & & \\\hline\end{array}$

Applying the lower of cost or market to each item of inventory, what should the total inventory value be for the following items?​ $\begin{array} { | c | c | c | c | c | c | } \hline \text { Item } & \begin{array} { c } \text { Inventory } \\\text { Quantity }\end{array} & \begin{array} { c } \text { Cost per } \\\text { Unit }\end{array} & \begin{array} { c } \text { Market } \\\text { value per } \\\text { Unit }\end{array} & \begin{array} { c } \text { T otal } \\\text { Cost }\end{array} & \begin{array} { c } \text { Total } \\\text { Market }\end{array} \\\hline \text { A } & 300 & \$ 15.00 & \$ 14.50 & \$ 4,500 & \$ 4,350 \\\hline \text { B } & 200 & 14.00 & 15.00 & 2,800 & 3,000 \\\hline \text { C } & 100 & 17.00 & 17.50 & 1,700 & 1,750 \\\hline\end{array}$