Exam 8: Inventories: Cost Measurement and Flow Assumptions

A manufacturing firm would not normally have an account titled

The purchases discounts taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?

Quicksilver adopted LIFO in January 1, 2010, when the inventory had a FIFO cost of $180, 000 ($10 per unit).At the end of 2010, inventory consisted of 18, 750 units at $12 per unit, and the ending inventory for 2011 consisted of 20, 000 units at $15 per unit. Required: a. Calculate the cost index to be used for 2010 and 2011 using the link-chain method. b. Compute the endinginvent ory for 2010 and 2011 using dollar-value LIFO.

The cost of goods sold can be determined only after a physical count of inventory on hand under the

Which one of the following statements is true?

For the year in which the change takes place (assuming rising prices), adoption of a "just-in-time" inventory system will most likely result in a(n):

Even though the LIFO cost flow assumption will reduce taxable income and the related cash outflow for income taxes, there are certain difficulties encountered with its implementation.Thus, dollar-value LIFO is often used. Required: Discuss three different ways that the dollar-value LIFO method overcomes some of the difficulties in the application of the LIFO approach.

Which one of the following statements is true?

Johnson Industries performed consulting services on account for a German customer on December 1, 2010.This transaction was for 30, 000 euros.Johnson's accounting year ends December 31.The invoice amount was received by Johnson on January 15, 2011.The exchange rates during this period were as follows: December 1 \ 1.10/ euro December 31 1.15/ euro January 15 1.12/ euro Required: Prepare the necessary journal entries to record this consulting revenue and subsequent cash receipt.

Titan Company changed its inventory cost flow assumption from FIFO to LIFO in a period of rising prices.What was the result of the change on net income in the year of the change?

Phillips Corp.purchased raw materials with a catalog price of $60, 000.Credit terms of 3/15, n/60 apply.If Phillips uses the net price method, the purchase should be recorded at

Which of the following is not an advantage of a perpetual inventory system?

On July 1, Deuce Hardware, Inc.had an inventory of 300 gas grills costing $100 each.Purchases and sales during July are as follows: Date Purchases Sales July 3 100@\ 125 each July 10 150@\ 110 each July 17 150@\ 130 each July 17 50@\ 120 each What is the cost of Deuce's inventory on July 31 using the FIFO method?

Which one of the following sets of inventory cost flow assumptions is not susceptible to profit manipulation by management?

On October 17, Sedona Salon Supplies bought $42, 000 of goods with terms of 1/10, n/30.One-third of the bill was paid on October 24, and the rest of the bill was paid on October 31. Required: Journalize for October 24 as follows: a. gross method of ac counting for purchase discounts b. net method of accounting for purchase discounts

Alabama Company (a U.S.company)purchases inventory from a Japanese company for 5, 000, 000 yen when the exchange rate is $.012.Alabama makes payment when the exchange rate is .013.When making the journal entry for payment, Alabama Company will record a

The following information is available for Crystal Company: Jan. 1 Beginning inventory 15 units @\ 12.00 each Jan. 9 Purchase 10 units @\ 16.00 each Jan. 14 Sale 6 units Jan. 20 Purchase 6 units @\ 18.00 each Jan 26 Sale 9 mits Required: Answer the following questions for Crystal Company: a. If FIFO is in use, what is the ending invent ory in doilars? b. If periodic LIFO is in use, what is the cost of goods sold? c. If moving average is in use, what is the ending inventory in dollars (round calculations to nearest cent)? d. If weighted average is in use, what is the ending inventory in dollars (round unit cost to the nearest cent)

Which of the following is not a disadvantage of using the FIFO cost flow assumption?

On December 31, 2009, the current cost of the Greene Company's ending inventory was $10, 000 when the cost index was 100.On January 1, 2010, Greene adopted the dollar value LIFO method of inventory costing.Information from the company's ending inventory records is as follows:. Ending Inventony Cost Reported at Year Index Dollar-Value LIFO 2010 110 \ 10,000 2011 125 15,500 2012 140 16,340 Required: Determine the current cost of Greene's ending inventory for the years 2010, 2011, and 2012.

IFRS and GAAP are similar for all of the following inventory accounting standards except IFRS