Exam 6: Inventories

Eneri Company's inventory records show the following data: A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. Under the FIFO method, the December 31 inventory is valued at

Ford Co. uses a periodic inventory system. Its records show the following for the month of May, in which 75 units were sold. Instructions Compute the ending inventory at May 31 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method.

Which of the following is not a common cost flow assumption used in costing inventory?

Switzer, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $900. At the statement date, each computer has a net realizable value of $400. How much loss should Switzer, Inc., record for the year?

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

If beginning inventory is understated by $13,000, the effect of this error in the current period is

The consistent application of an inventory costing method is essential for

In a perpetual inventory system, the cost of goods sold under the FIFO method is based on the cost of the latest goods on hand during the period.

Gray Company uses the periodic inventory system to account for inventories. Information related to Gray Company's inventory at October 31 is given below: Instructions 1. Show computations to value the ending inventory using the FIFO cost assumption if 550 units remain on hand at October 31. 2. Show computations to value the ending inventory using the weighted-average cost method if 550 units remain on hand at October 31. 3. Show computations to value the ending inventory using the LIFO cost assumption if 550 units remain on hand at October 31.

Morton Watch Company reported the following income statement data for a 2-year period. Morton uses a periodic inventory system. The inventories at January 1, 2017, and December 31, 2018, are correct. However, the ending inventory at December 31, 2017, was overstated $5,000. Instructions (a) Prepare correct income statement data for the 2 years. (b) What is the cumulative effect of the inventory error on total gross profit for the 2 years?

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 average-cost method, the value of ending inventory is

Turturro Department Store utilizes the retail inventory method to estimate its inventories. It calculated its cost to retail ratio during the period at 75%. Goods available for sale at retail amounted to $600,000 and goods were sold during the period for $420,000. The estimated cost of the ending inventory is

Romanoff Industries had the following inventory transactions occur during 2018: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

Waters Hardware reported cost of the goods sold as follows. Waters made two errors: (1) 2017 ending inventory was overstated $5,000, and (2) 2018 ending inventory was understated $8,000 Instructions (a) Compute the correct cost of goods sold for each year. (b) What correcting entry would Waters make for error (2)?

Nolen Company is preparing the annual financial statements dated December 31, 2018. Information about inventory stocked for regular sale follows: Instructions Compute the valuation for the December 31, 2018, inventory using the lower-of-cost-or-snet realizable value basis.

Romanoff Industries had the following inventory transactions occur during 2018: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using FIFO? (rounded to whole dollars)

Selection of an inventory costing method by management does not usually depend on

138. Pappy's Staff has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?

The accountant at Almira Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $8,190. The LIFO method will result in income before taxes of $7,290. What is the difference in tax that would be paid between the two methods?

Inventory accounting under IFRS differs from GAAP in regard to