Exam 5: Accounting for Inventories

Given the following events, what is the per-unit value of ending inventory on November 30 if this company uses a weighted-average perpetual inventory system? November 1: 5 units were purchased at $6 per unit. November 12: 10 units were purchased at $7.50 per unit. November 14: 7 units were sold for $14 per unit. November 24: 12 units were purchased at $10 per unit.

On September 30 a company needed to estimate its ending inventory to prepare its third quarter financial statements. The following information is available: Beginning inventory, July 1: $4,000 Net sales: $40,000 Net purchases: $41,000 The company's gross margin ratio is 15%. Using the gross profit method, the cost of goods sold would be:

If obsolete or damaged goods can be sold, they will be included in inventory at their net realizable value.

A company's cost of inventory was $317,500. Due to phenomenal demand for this product, the market value of its inventory increased to $323,000. According to the consistency principle, this company should write up the value of its inventory.

Given the following information, determine the cost of ending inventory at December 31 using the FIFO perpetual inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit. December 15: 20 units were purchased at $10.15 per unit. December 22: 18 units were sold at $35 per unit.

The cost of an inventory item includes the _____________, plus ______________ costs necessary to put it in a place and condition for sale.

The conservatism constraint requires that when more than one estimate of the amounts that are to be received or paid in the future exist and these estimates are about equally likely, then the less optimistic amount is used.

A company made the following merchandise purchases and sales during the month of May: May 1 purchased 380 units at \ 15 each May 5 purchased 270 units at \ 17 each May 10 sold 400 units at \ 50 each May 20 purchased 300 units at \ 22 each May 25 sold 400 units at \ 50 each There was no beginning inventory. If the company uses the FIFO periodic inventory method, what would be the cost of the ending inventory?

If the _______________ is responsible for paying the freight, ownership of merchandise inventory passes when the goods arrive at their destination.

The choice of an inventory valuation method can have a major impact on gross profit and cost of sales.

An overstatement of ending inventory will cause