Exam 6: Inventories

Flaherty Company had beginning inventory on May 1 of $12,000. During the month, the company made purchases of $40,000 but returned $2,000 of goods because they were defective. At the end of the month, the inventory on hand was valued at $15,500. Calculate cost of goods available for sale and cost of goods sold for the month.

Priscilla has the following inventory information. A physical count of merchandise inventory on July 31 reveals that there are 35 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is

In a period of inflation, the cost flow method that results in the lowest income taxes is the

In a period of rising prices, the inventory reported in Crawford Company's balance sheet is close to the current cost of the inventory. Breland Company's inventory is considerably below its current cost. Identify the inventory cost flow method being used by each company. Which company has probably been reporting the higher gross profit?

Indrisano's Used Cars uses the specific identification method of costing inventory. During March, Indrisano purchased three cars for $12,000, $14,400, and $19,200, respectively. During March, two cars are sold for a total of $34,600. Indrisano determines that at March 31, the $14,400 car is still on hand. What is Indrisano's gross profit for March?

The lower-of-cost-or-net realizable value basis is an example of the accounting concept of conservatism.

Winsor Company uses the perpetual inventory system and the LIFO method. The following information is available for the month of May: Instructions Prepare a schedule to show cost of goods sold and the value of the ending inventory for the month of May.

Baden's Hardware Store prepared the following analysis of cost of goods sold for the previous three years: Net income for the years 2017, 2018, and 2019 was $70,000, $60,000, and $55,000, respectively. Since net income was consistently declining, Mr. Baden hired a new accountant to investigate the cause(s) for the declines. The accountant determined the following: 1. Purchases of $25,000 were not recorded in 2017. 2. The 2017 December 31 inventory should have been $24,000. 3. The 2018 ending inventory included inventory costing $5,000 that was purchased FOB destination and in transit at year end. 4. The 2019 ending inventory did not include goods costing $4,000 that were shipped on December 29 to Sampson Plumbing Company, FOB shipping point. The goods were still in transit at the end of the year. Instructions Determine the correct net income for each year. (Show all computations.)

The specific identification method of costing inventories is used when the

Shellhammer Company's inventory records show the following data for the month of September: A physical inventory on September 30 shows 200 units on hand. Calculate the value of ending inventory and cost of goods sold if the company uses LIFO inventory costing and a periodic inventory system.

Goodman Company's inventory records show the following data: A physical inventory on December 31 shows 6,000 units on hand. Under the FIFO method, the December 31 inventory is

Sawyer Company uses the perpetual inventory system and the moving-average method to value inventories. On August 1, there were 10,000 units valued at $30,000 in the beginning inventory. On August 10, 20,000 units were purchased for $6 per unit. On August 15, 24,000 units were sold for $12 per unit. The amount charged to cost of goods sold on August 15 was

Norris Company uses the perpetual inventory system and had the following purchases and sales during March. Instructions Using the inventory and sales data above, calculate the value assigned to cost of goods sold in March and to the ending inventory at March 31 using (a) FIFO and (b) LIFO.

In a manufacturing business, inventory that is ready for sale is called

Delmar Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of $600,000, and sales of $960,000. Delmar's days in inventory is:

FIFO and LIFO are the two most common cost flow assumptions made in costing inventories. The amounts assigned to the same inventory items on hand may be different under each cost flow assumption. If a company has no beginning inventory, explain the difference in ending inventory values under the FIFO and LIFO cost bases when the price of inventory items purchased during the period have been (1) increasing, (2) decreasing, and (3) remained constant.

It is generally recognized that a major objective of accounting for inventory is the proper determination of ______________.

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: An end of the month (1/31/18) inventory showed that 160 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

During July, the following purchases and sales were made by Big Dan Company. There was no beginning inventory. Big Dan Company uses a perpetual inventory system. Under the LIFO method, the cost of goods sold for each sale is:

At May 1, 2018, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: 800 units at $7 600 units at $8 The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. The value of Kibbee's inventory at May 31, 2018 is