Exam 6: Inventories

The following information was available for Hoover Company at December 31, 2014: beginning inventory $110,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Hoover's days in inventory in 2014 was

Which one of the following inventory methods is often impractical to use?

Bellingham Inc. took a physical inventory at the end of the year and calculated that £1,450,000 of goods were on hand. Bellingham determined that £25,000 of goods were in transit. The goods were shipped F.o.b. shipping point and were received by Bellingham two days after the inventory count. The company also had £275,000 of goods out on consignment. What amount should Bellingham report for inventory on its statement of financial position?

Your former college roommate is opening a new retail store and asks you "Which inventory costing method should I use?" What is your response? Include a comparison of the tax effect, statement of financial position effect, and income statement effect for FIFO versus average-cost.

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system. Under the LIFO method, the cost of goods sold for each sale is: July 13 July 22

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 $50,000 in the beginning inventory. On August 10, 20,000 units were purchased for $10 per unit. On August 15, 24,000 units were sold for $20 per unit. The amount charged to cost of goods sold on August 15 was

Moore Company reported net income of $60,000 in 2013 and $80,000 in 2014. However, ending inventory was overstated by $8,000 in 2013. Instructions Compute the correct net income for Moore Company for 2013 and 2014.

Which costing method cannot be used to determine the cost of inventory items before lower-of-cost-or-net realizable value market is applied?

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

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under FIFO and average cost flow assumptions.

When valuing ending inventory under a perpetual inventory system, the

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

Holliday Company's inventory records show the following data: A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for ₤3 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method. Under the FIFO method, the December 31 inventory is valued at

IFRS allows companies to cost inventory using either the LIFO or the FIFO cost flow assumption.

Unitech has the following inventory information. A physical count of merchandise inventory on July 31 reveals that there are 75 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

Overstating ending inventory will overstate all of the following except

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

The gross profit method is based on the assumption that the rate of gross profit remains constant from one year to the next.

If the inventory reported on the statement of financial position is understated, then net income reported on the income statement is understated.

A company just starting business made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 100 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is