Exam 6: Inventories

In the first month of operations, Santos Company made three purchases of merchandise in the following sequence: (1) 200 units at $6, (2) 300 units at $7, and (3) 400 units at $8. Assuming there are 300 units on hand, compute the cost of the ending inventory under (1) the FIFO method and (2) the average-cost method. Santos uses a periodic inventory system.

The specific identification method of inventory costing is appropriate for costly, easily distinguishable items such as cars, pianos, and antigues.

Finished goods are a classification of inventory for a manufacturer that are completed and ready for sale.

Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO. (b) Compute the cost of the ending inventory and the cost of goods sold using the average-cost method.

A company uses the periodic inventory method and the beginning inventory is overstated by $4,000 because the ending inventory in the previous period was overstated by $4,000. The amounts reflected in the current end of the period statement of financial position are

India Eastern Corporation's computation of cost of goods sold is: India East's inventory turnover is

Companies adopt different cost flow methods for each of the following reasons except

At January 1, 2014, Britannica Inc. reported inventory of £425,000. At December 31, 2014, the inventory on hand was £501,000. If cost of goods sold for 2014 was £4,996,875, What is the inventory turnover ratio for the year?

In a period of falling prices, the average-cost method results in a lower cost of goods sold than the FIFO method.

Tatsoi Company's purchase and sales transactions for the month of May were as follows: Assuming that the company keeps perpetual inventory records, Tatsoi's cost of goods sold for the month of May on a LIFO basis is

The cost of goods available for sale is allocated to the cost of goods sold and the

Net realizable value is

Versace Company, an Italian subsidiary of a US company, uses the periodic inventory system. At November 1, the beginning inventory consisted of 2,400 units that cost €120 each. During the month, the company made two purchases: 1,000 units at €130 each and 4,000 units at €135 each. Versace sold 4,300 units during November. Using the LIFO cost flow assumption, what is the ending inventory?

The following information is available for Park Company at December 31, 2014: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $1,200,000; and sales $1,600,000. Park's inventory turnover in 2014 is

Purdy Company is in the electronics industry and the price it pays for inventory is decreasing. Instructions Indicate which inventory method will: a. provide the lowest ending inventory. b. provide the highest cost of goods sold. c. result in the highest net income. d. result in the lowest income tax expense. e. produce the most stable earnings over several years.

Bosio Corporation's computation of cost of goods sold is: Bosio's inventory turnover is

The following information is available through June 2014 for Kimchee Company: On June 29, a fire completely destroyed Kimchee's inventory. Using the gross profit method, the estimated value of the inventory destroyed is

The average cost method costs units using a weighted-average unit cost.

Kirby Company suffered a loss of its inventory on March 28 due to a fire in its warehouse. As a basis for filing a claim with its insurance company, Kirby Company developed the following information: The company has experienced an average gross profit rate of 35% in the past and this rate appears to be appropriate in the current period. Instructions Using the gross profit method, prepare an estimate of the cost of the inventory destroyed by fire on March 28. Show all computations in good form.

Widner Company understated its inventory by $10,000 at December 31, 2013. It did not correct the error in 2013 or 2014. As a result, Widner's equity was: