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Exam 5: Inventories and Cost of Sales

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Question 91

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When applying the lower of cost or market method of inventory valuation for LIFO,market is defined as the ________.

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Question 92

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Decisions management must make in accounting for inventory cost include all of the following except:

A) Costing method.
B) Perpetual or periodic inventory system.
C) Customer demand for inventory.
D) Damage or obsolescence
E) Items included in inventory and their costs.

F) A) and B)
G) A) and C)

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Question 93

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The days' sales in inventory ratio is computed by dividing ending inventory by cost of goods sold and multiplying the result by 365.

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory. -If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

The choice of costing method will impact both the balance sheet and income statement.

A company's inventory records indicate the following data for the month of July: If the company uses the weighted average inventory valuation method and the perpetual inventory system,what would be the cost of its ending inventory? (Round average cost per unit to 2 decimals,and final answer to the nearest dollar.)

Sandoval needs to determine its year-end inventory.The warehouse contains 20,000 units,of which 3,000 were damaged by flood and are not sellable.Another 2,000 units were purchased from Markor Company,FOB shipping point,and are currently in transit.The company also consigns goods and has 4,000 units at a consignee's location.How many units should Sandoval include in its year-end inventory?

When inventory costs are declining,explain the impact to the balance sheet and income statement using the FIFO method.

A flood destroyed a company's warehouse contents on September 12.The following information was the only information that was salvaged: -Inventory,beginning: $28,000 -Purchases for the period: $17,000 -Sales for the period: $55,000 -Sales returns for the period: $700 The company's average gross profit ratio is 35%.What is the estimated cost of the lost inventory using the gross profit method?

A company uses the retail inventory method and has the following information available concerning its most recent accounting period: 1.What is the cost-to-retail ratio using the retail method? 2.What is the estimated cost of the ending inventory?

Explain the effects of inventory valuation methods on the cost of ending inventory,income,and income taxes.

A company reports the following information regarding its inventory. Beginning inventory: cost is $80,000; retail is $130,000 Net purchases: cost is $65,000; retail is $120,000 Sales at retail: $145,000 The year-end inventory shows $105,000 worth of merchandise available at retail prices.What is the cost of the ending inventory calculated using the retail inventory method?

Monarch Company uses a weighted-average perpetual inventory system,and has the following purchases and sales: -What is the value of ending inventory? (Round average cost per unit to 2 decimal places and final answer to the nearest dollar.)

Net realizable value for damaged or obsolete goods is sales price less the cost of making the sale.

________ is the estimated sales price of damaged goods minus the cost of making the sale.

Mary's Antiques does not have its own retail location,instead maintains inventory in its warehouse and sells merchandise through Oldtime Antique Mall.Oldtime does not assume responsibility for goods until they are sold to customers at which time it takes a commission for items sold and sends the sale proceeds to Mary's.Identify which company has the role of the consignor and the consignee.Which company should include any unsold goods as part of its inventory?

All of the following statements related to goods on consignment are true except:

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system. -Determine the cost assigned to cost of goods sold using LIFO.

Accounting principles require that inventory be reported at the market value (cost)of replacing inventory when cost is lower than market value.

LIFO assumes that inventory costs flow in the order incurred.