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Exam 6: Inventories

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Question 61

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The following lots of a Commodity P were available for sale during the year. Use this information to answer the questions that follow. 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 cost of goods sold for the year according to the FIFO method?

A) $1,380
B) $1,375
C) $1,510
D) $1,250

E) A) and D)
F) None of the above

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Question 62

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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.

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Question 63

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​All of the following are documents used for inventory control except

Match each situation to its impact (a-c) on the current year's net income. 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. -Merchandise was purchased FOB destination on the last day of the year. The cost of the merchandise purchased was not included in ending inventory.

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Show your work.

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

If ending inventory for the year is overstated, stockholders' equity reported on the balance sheet at the end of the year is understated.

The following data were taken from the annual reports of Big Bang Inc., a manufacturer of fireworks, and Orange Inc., a manufacturer of computers. (a) Determine the (1) inventory turnover and (2) number of days' sales in inventory for Big Bang and Orange.Round your answers to two decimal places.(b) How would you expect these measures to compare between the companies? Why?

On the basis of the following data for Sanford Industries as of December 31, what is the value of the inventory at the lower of cost or market? Apply lower of cost or market to each inventory item.

Match each description to the appropriate cost flow assumption (a-c). -Cost of the latest purchases are assigned to ending inventory A)FIFO B)LIFO C)Weighted average

The following units of an inventory item were available for sale during the year. Use this information to answer the following questions.Beginning inventory 10 units at $55 First purchase 25 units at $60 Second purchase 30 units at $65 Third purchase 15 units at $70 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:

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

The inventory costing method that reports the earliest costs in ending inventory is

Match each situation to its impact (a-c) on the current year's net income. 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. -Merchandise held on consignment was included in the count of ending inventory.

One negative effect of carrying too much inventory is risk that customers will change their buying habits.

FIFO reports higher gross profit and net income than the LIFO method when

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 LIFO.

Based on the following information, what is (1) inventory turnover; (2) average daily cost of goods sold using a 365 day year; and (3) number of days' sales in inventory.​ Cost of goods sold $195,640 Inventory: Beginning of year 20,500 End of year 18,628

Use the information below to answer the following questions.The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. -Assuming that the company uses the perpetual inventory system, determine the gross profit for the month of May using the LIFO cost method.​

Use of the retail inventory method requires taking a physical count of inventory.