Exam 7: Merchandise Inventory

How do inventories of manufacturing companies differ from inventories of merchandising companies?

Simon Cereal purchased 100 pounds of cornflakes for $100. Transportation cost to Simon's production facility was $25 for the barrel of cornflakes shipped FOB destination. Simon paid $60 for 100 one-pound biodegradable plastic bags into which the cornflakes were placed. The cost of each one-pound bag of cornflakes is:

Which one of the following companies would likely carry the largest percentage of inventory as compared to its other assets?

Portland Supplies Co. mistakenly excluded $3,000 of goods from its December 31, 2016 physical inventory count. Its December 31, 2017 inventory amount was correct. As a result of this error,

During a period of rising prices and increasing inventory, which cost flow assumption used on both federal income tax returns and financial reports would provide a company with the greatest cash position?

Dakota Industries has two items in inventory as of December 31, 2017. Each item was purchased for $52. Company management chose to write down Item #1 to $39, which at year-end was assessed to be its market value. Management did not write down Item #2 because its market value was estimated to be greater than $52. During 2017, each item was sold for $63 cash. The journal entry for the write down of Item #1 would include which of the following? a. Inventory Loss 24 Inventory 24 b. Inventory 13 Inventory Loss 13 c. Inventory Loss 13 Inventory 13 d. Inventory 24 Inventory Loss 24

During a period of rising prices and inventories, a company whose current ratio is dangerously close to the minimum specified by agreement with a major creditor would prefer which cost flow assumption?

Selecting an inventory cost flow assumption will most likely be impacted by which one of the following?

During a period of changing inventory prices, which of the following is not immediately sensitive to the particular cost flow assumption adopted?

Summers Company began business on August 1, 2017, and uses the periodic inventory method. During August, Summers made the following purchases: August 3 100 units @ \ 10 \ 1,000 August 21 300 units @\ 20 \ 6,000 Other information provided: August sales 350 units at \ 50 each August expenses excluding cast of goods sold \ 7,200 August 31 current assets excluding irventory \ 34,000 August 31 current liabilities \ 25,000 Calculate Summers' August 31 ending inventory under the FIFO and LIFO cost flow assumptions.

Items should be included in the company's inventory if they are:

Bisbee Ltd. has been fraudulently overstating its inventory in order to "pump up" a lagging income. It started this practice in 2016 and overstated the 2016 income by $9,000. By what amount will they have to overstate December 31, 2017 inventory in order to overstate 2017 income by $14,000?

When accounting for inventory consignments, the issue which helps determine whether or not the inventory cost should be included on a company's balance sheet is:

Wood Inc. sells automobiles at $6,000 above cost and uses the specific identification method for inventory. Below are the cars and the costs Wood paid for the inventory before the sale. Auto 1: $35,000 Auto 2: $17,500 Auto 3: $19,500 Auto 4: $23,000 Auto 5: $26,000 If Wood sells Auto 3 and Auto 5 for cash, which of the following would be included in the journal entries it uses to record the sale and recognize the cost of the inventory?

During a year of rising prices and increasing inventory, which cost flow assumption would measure the smallest working capital ratio?

Ruby uses the FIFO cost flow assumption. Calculate its January cost of goods sold.

Use the information that follows concerning Cinci Corporation to answer problems Cinci Company began business on March 1. During March, Cinci made the following purchases. March 1: 100 units @ \ 8 \8 00 March 6: 200 units @ \ 10 2,000 March sales. 24 units -Calculate cost of goods sold during March under the Average cost flow assumption.

If an entity understates its ending inventory for the current period, why does the effect on cost of goods sold and inventory carry over to the next year?

At which point in accounting for inventory in a perpetual system is determining the cost of goods sold amount an issue?

Jackson Roper fraudulently overstated its December 31, 2016 inventory by $8,000. As a result of this overstatement,