Exam 6: Inventories

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

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is

Linville Company had beginning inventory on May 1 of €12,000. During the month, the company made purchases of €30,000 but returned €2,000 of goods because they were defective. At the end of the month, the inventory on hand was valued at €10,500. Calculate cost of goods available for sale and cost of goods sold for the month.

The consistent application of an inventory costing method is essential for

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?

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 LIFO method, cost of goods sold is

Aiwa Inc. uses the average-cost inventory method. In 2014, the company reported net income of ¥59,600,000. Had average-cost been used, the company would have reported net income of ¥58,900,000. Assuming a 25% tax rate, what is the impact of the inventory cost flow assumption on Aiwa's taxes for 2014?

At year-end, Dana Corporation has 3,000 units of Lolland, 3,000 units of Falster, and 4,500 units of Jultand in its ending inventory. Specific data with respect to each product follows: What amount will Dana report for ending inventory using lower-of-cost-or-net realizable value?

Use of the FIFO inventory valuation method enables a company to report higher net income when in a period of falling prices.

Bueno Company's purchase and sales transactions for the month of July were as follows: The company sold 8,000 units on July 22. Assuming that the company keeps perpetual inventory records, Bueno's ending inventory on a LIFO basis is

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 LIFO inventory method, the amount allocated to cost of goods sold for July is

A company just starting in business purchased three inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $260 and used FIFO costing, the gross profit for the period would be

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

Lois Howe and Ron Dole are department managers in the housewares and shoe departments, respectively, for Litwins, a large department store. Ron has observed Lois taking inventory from her own department home, apparently without paying for it. He hesitates confronting Lois because he is due to be promoted, and needs Lois' recommendation. He also does not want to notify the company management directly, because he doesn't want an ethics investigation on his record, believing that it will give him a "goody-goody" image. This week, Lois tried on several pairs of expensive running shoes in his department before finding a pair that suited her. She did not, however, buy them. That very pair was missing this morning. Litwins recently replaced its old periodic inventory system with a perpetual inventory system using scanners and bar codes. In addition, the annual inventory is to be replaced by a monthly inventory conducted by an independent firm. On hearing the news of the changes, Ron relaxes. "The system will catch Lois now," he says to himself. Required: 1. Is Ron's attitude justified? Why or why not? 2. What, if any, action should Ron take now?

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. The weighted-average cost per unit is

Which method of inventory costing is prohibited under IFRS?

Instructions Using the inventory and sales data above, calculate the value assigned to cost of goods sold in March and to the ending inventory at March 31 using (a) FIFO and (b) LIFO.

The cost of goods available for sale is allocated between

The cost flow method that often parallels the actual physical flow of merchandise is the