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Exam 6: Inventories

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Question 41

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On the basis of the following data for Sanford Industries as of December 31, determine the value of the inventory at the lower of cost or market. Also, show how the inventory would appear on the balance sheet (assume that the cost was determined by the FIFO method). Apply lower of cost or market to each inventory item.

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Inventory valuation ...

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Question 42

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When inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.

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Question 43

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If a fire destroys the inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the goods sold.

Excess inventory results in all of the following except

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

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

The following units of an inventory item were available for sale during the year. Use this information to answer the following questions. $\begin{array} { l l } \text { Beginning inventory } & 10 \text { units at } \$ 55 \\\text { First purchase } & 25 \text { units at } \$ 60 \\\text { Second purchase } & 30 \text { units at } \$ 65 \\\text { Third purchase } & 15 \text { units at } \$ 70\end{array}$ The firm uses the periodic inventory system. During the year, 60 units of the item were sold. ​ -The ending inventory cost rounded to nearest dollar using average cost is:

Beginning inventory, purchases, and sales data for widgets are as follows: ​ Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

List the internal control objectives illustrated by the following:

The following data were taken from Castle, Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc. Round to two decimal places.

On the basis of the following data, estimate the cost of the inventory at March 31 by the retail method.

Inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity?

On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method? $\begin{array} { l l r r } & & \text { Cost } & \text { Retail } \\\text { May 1 } & \text { Inventory } & \$ 125,000 & \$ 166,667 \\\text { May 1-31 } & \text { Purchases } & 235,000 & 313,333 \\\text { May 1-31 } & \text { Sales } & & 230,000\end{array}$

If ending inventory for the year is understated, net income for the year is overstated.

Based on the following information: what is the company's (1) inventory turnover; (2) average daily cost of goods sold; and (3) number of days' sales in inventory for the current year? Use a 365-day year. ​

Match each description to the appropriate cost flow assumption.

The units of an item available for sale during the year were as follows: $\begin{array}{lrll}\text { Jan. } & 1 & \text { Inventory } & 25 \text { units at } \$ 45 \\\text { Mar. } & 4& \text { Purchase } & 15 \text { units at } \$ 50 \\\text { June } & 7& \text { Purchase } & 35 \text { units at } \$ 58 \\\text { Nov. } & 15& \text { Purchase } & 20 \text { units at } \$ 65\end{array}$ ​ There are 30 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using FIFO.

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the