Exam 8: Valuation of Inventories: a Cost-Basis Approach

Use the following information for questions Richey Co.records purchases at net amounts.On May 5 Richey purchased merchandise on account, $16,000, terms 2/10, n/30.Richey returned $1,200 of the May 5 purchase and received credit on account.At May 31 the balance had not been paid. -The amount to be recorded as a purchase return is

The following information was derived from the 2007 accounting records of Logan Co.: Logan's Goods Logan 's Central Warehouse Held by Consignees Beginning inventory \ 130,000 \ 14,000 Purchases 575,000 70,000 Freight-in 10,000 Transportation to consignees 5,000 Freight-out 30,000 8,000 Ending inventory 145,000 20,000 Logan 's 2007 cost of sales was

Johnson Company had 500 units of "Tank" in its inventory at a cost of $4 each.It purchased, for $2,800, 300 more units of "Tank".Johnson then sold 400 units at a selling price of $10 each, resulting in a gross profit of $1,600.The cost flow assumption used by Johnson

Kingman Company had 400 units of "Dink" in its inventory at a cost of $6 each.It purchased 600 more units of "Dink" at a cost of $9 each.Kingman then sold 700 units at a selling price of $15 each.The LIFO liquidation overstated normal gross profit by

Purchase Discounts Lost is a financial expense and is reported in the "other expenses and losses" section of the income statement.

Use the following information for questions Kiner Co.has the following data related to an item of inventory: Inventory, March 1 100 units @\ 4.20 Purchase, March 7 350 units @\ 4.40 Purchase, March 16 70 units @\ 4.50 Inventory, March 31 130 units -The value assigned to ending inventory if Kiner uses LIFO is

All of the following costs should be charged against revenue in the period in which costs are incurred except for

Eller Co.received merchandise on consignment.As of January 31, Eller included the goods in inventory, but did not record the transaction.The effect of this on its financial statements for January 31 would be

Which of the following is correct?

Use the following information for questions Transactions for the month of June were: Purchases Sales June 1 (balance) 800@\ 3.20 June 2 600@\ 5.50 3 2,200@3.10 6 1,600@5.50 7 1,200@3.30 9 1,000@5.50 15 1,800@3.40 10 400@6.00 22 500@3.50 18 1,400@6.00 25 200@6.00 -Assuming that perpetual inventory records are kept in dollars, the ending inventory on a LIFO basis is

If ending inventory is understated, then net income is understated.

The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its

The acquisition cost of a certain raw material changes frequently.The book value of the inventory of this material at year end will be the same if perpetual records are kept as it would be under a periodic inventory method only if the book value is computed under the

Use the following information for questions The following information was available from the inventory records of Neer Company for January: Units Unit Cost Total Cost Balance at January 1 3,000 \ 9.77 \ 29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2,700 10.71 28,917 Sales: January 7 (2,500) January 31 (4,000) Balance at January 31 1,200 -Assuming that Neer does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar?

Use the following information for Ely Company had January 1 inventory of $100,000 when it adopted dollar-value LIFO.During the year, purchases were $600,000 and sales were $1,000,000.December 31 inventory at year-end prices was $126,500, and the price index was 110. -What is Ely Company's ending inventory?

The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007.Orion uses the periodic inventory system.The January 1, 2007 merchandise inventory balance will appear

When using a perpetual inventory system,

Use the following information for questions Transactions for the month of June were: Purchases Sales June 1 (balance) 800@\ 3.20 June 2 600@\ 5.50 3 2,200@3.10 6 1,600@5.50 7 1,200@3.30 9 1,000@5.50 15 1,800@3.40 10 400@6.00 22 500@3.50 18 1,400@6.00 25 200@6.00 -Assuming that perpetual inventory records are kept in units only, the ending inventory on a LIFO basis is

In a period of rising prices, the inventory method which tends to give the highest reported net income is

How should the following costs affect a retailer's inventory valuation? Freight-in Interest on Inventory Loan a. Increase No effect b. Increase Increase c. No effect Increase d. No effect No effect