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Exam 6: Inventories

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Question 1

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The following lots of a particular commodity were available for sale during the year: 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?

A) $655
B) $620
C) $690
D) $659

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

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Question 2

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The units of Product Green-2 available for sale during the year were as follows: There are 17 units of the product in the physical inventory at Sep 30. The periodic inventory system is used. Determine the cost of merchandise sold by (a) FIFO, (b) LIFO, and (c) average cost methods.

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Question 3

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Inventory controls start when the merchandise is shelved in the store area.

Safeguarding inventory from damage or theft is a primary objective for the control of inventory. If you were running a clothing store, name three specific controls you would implement to guard inventory from theft.

If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data?

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

If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is

Under a periodic inventory system

If ending inventory for the year is overstated, retained earnings reported on the balance sheet at the end of the year is understated.

Three identical units of Item Magnesium XP are purchased during May, as shown below. Assume that one unit is sold on May 23 for $153. Determine the gross profit for May and ending inventory on May 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year. What is the amount of the inventory at the end of the year using the LIFO method?

Beginning inventory, purchases and sales data for hammers are as follows: Assuming the business maintains a perpetual inventory system, complete the inventory cards and calculate the cost of merchandise sold and ending inventory under the following assumptions: a. First-in, first-out b. Last-in, first-out

On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?

The following units of an inventory item were available for sale during the year: The firm uses the periodic inventory system. During the year, 60 units of the item were sold. The value of ending inventory using FIFO is:

Merchandise 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 retained earnings?

The inventory data for an item for November are: Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Based on the following information, compute (a) Inventory turnover; (b) Average daily cost of merchandise sold using a 365 day year; and (c) Number of days' sales in inventory. April 30, 2012 Cost of merchandise sold $ 195,640 Inventory: Beginning 20,500 Ending 18,628

During the taking of its physical inventory on December 31, 2011, Gentry Supplies Company incorrectly counted its inventory as $245,000 instead of the correct amount of $254,000. Indicate the affect of the misstatement on Gentry Supplies Company's balance sheet and income statement for the year ended December 31, 2011.