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

Belle Co.received merchandise on consignment.As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory.The effect of this on its financial statements for March 31 would be

LIFO liquidation often distorts net income, but usually leads to substantial tax savings.

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 maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar?

TJones Manufacturing Company has the following account balances at year end: Office supplies \ 4,000 Raw materials 27,000 Work-in-process 59,000 Finished goods 72,000 Prepaid insurance 6,000 What amount should TJones report as inventories in its balance sheet?

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. -By how much should the account payable be adjusted on May 31?

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 cost of goods sold if Kiner uses FIFO is

Valuation of inventories requires the deter?mination of all of the following except

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

LIFO is inappropriate where unit costs tend to decrease as production increases.

In situations where there is a rapid turnover, an inventory method which produces a balance sheet valuation similar to the first-in, first-out method is

In a period of rising prices, the inventory method which tends to give the highest reported cost of goods sold is

Kingman Company had 500 units of "Dink" in its inventory at a cost of $5 each.It purchased, for $2,400, 300 more units of "Dink".Kingman then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,100.The cost flow assumption used by Kingman

The LIFO conformity rule requires that if a company uses LIFO for tax purposes, it must also use LIFO for financial accounting purposes.

The following information applied to Grey, Inc.for 2007: Merchandise purchased for resale \ 300,000 Freight-in 8,000 Freight-out 5,000 Purchase returns 2,000 Grey's 2007 inventoriable cost was

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 FIFO basis is

Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

The pricing of issues from inventory must be deferred until the end of the accounting period under the following method of inventory valuation:

Which of the following statements is not true as it relates to the dollar-value LIFO inven?tory method?

Use the following information for questions Dexter, Inc.is a calendar-year corporation.Its financial statements for the years 2007 and 2006 contained errors as follows: 2007 2006 Ending inventory \ 3,000 overstated \ 8,000 overstated Depreciation expense \ 2,000 understated \ 6,000 overstated -Assume that the proper correcting entries were made at December 31, 2006.By how much will 2007 income before taxes be overstated or understated?

Goods on consignment are