Exam 6: Inventories

The following information is available for Everett Company at December 31, 2015: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $1,050,000; and sales $1,800,000. Everett's inventory turnover in 2015 is

An error in the physical count of goods on hand at the end of a period resulted in a $15,000 overstatement of the ending inventory. The effect of this error in the current period is $\text { Cost of Goods Sold\quad Net Income }$ a. Understated $\quad$$\quad$$\quad$$\quad$$\quad$ Understated b. Overstated $\quad$$\quad$$\quad$$\quad$$\quad$ Overstated c. Understated $\quad$$\quad$$\quad$$\quad$$\quad$ Overstated d. Overstated $\quad$$\quad$$\quad$$\quad$$\quad$ Understated

Turturro Department Store utilizes the retail inventory method to estimate its inventories. It calculated its cost to retail ratio during the period at 75%. Goods available for sale at retail amounted to $600,000 and goods were sold during the period for $420,000. The estimated cost of the ending inventory is

Freight terms of FOB shipping point mean that the

Under generally accepted accounting principles, management has the choice of physically counting inventory on hand at the end of the year or using the gross profit method to estimate the ending inventory.

Netta Shutters has the following inventory information. Nov. 1 Inventory 30 units @ \ 8.00 8 Purchase 120 units @ \ 8.30 17 Purchase 60 units @ \8 .40 25 Purchase 90 units @ \ 8.80 A physical count of merchandise inventory on November 30 reveals that there are 90 units on hand. Assume a periodic inventory system is used. Cost of goods sold (rounded to the nearest dollar) under the average-cost method is

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2015 are as follows: Units Per unit price Total Balance, 1/1/15 200 \ 5.00 \ 1,000 Purchase, 1/15/15 100 5.30 530 Purchase, 1/28/15 100 5.50 550 An end of the month (1/31/15) inventory showed that 160 units were on hand. How many units did the company sell during January, 2015?

Specific Identification must be used for inventory valuation where the inventory items are not interchangeable under GAAP $\quad$ IFRS a. Yes $\quad$$\quad$ No b. Yes $\quad$$\quad$ Yes c. No $\quad$$\quad$ No d. No $\quad$$\quad$ Yes

Eneri Company's inventory records show the following data: Units Unit Cost Inventory, January 1 10,000 \ 9.20 Purchases: June 18 9,000 8.00 November 8 6,000 7.00 A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. What is the cost of goods available for sale?

Romanoff Industries had the following inventory transactions occur during 2015: Units Cost/unit 2/1/15 Purchase 54 \ 45 3/14/15 Purchase 93 \ 47 5/1/15 Purchase 66 \ 49 The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

The requirement that companies use the same cost flow assumption of all goods of a similar nature is found in GAAP $\quad$ IFRS a. Yes $\quad$$\quad$ No b. Yes $\quad$$\quad$ Yes c. No $\quad$$\quad$ No d. No $\quad$$\quad$ Yes

If beginning inventory is understated by $13,000, the effect of this error in the current period is $\text { Cost of Goods Sold\quad Net Income }$ a. Understated $\quad$$\quad$$\quad$$\quad$$\quad$ Understated b. Overstated $\quad$$\quad$$\quad$$\quad$$\quad$ Overstated c. Understated $\quad$$\quad$$\quad$$\quad$$\quad$ Overstated d. Overstated $\quad$$\quad$$\quad$$\quad$$\quad$ Understated

Moroni Industries has the following inventory information. July 1 Beginning Inventory 40 units at \ 120 5 Purchases 240 units at \ 112 14 Sale 160 units 21 Purchases 120 units at \ 115 30 Sale 140 units Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis?

During July, the following purchases and sales were made by Big Dan Company. There was no beginning inventory. Big Dan Company uses a perpetual inventory system. Purchases Sales July 3 40 units @ \ 12 July 13 50 units 11 40 units @ \ 13 22 20 units 20 20 units @ \ 15 Under the LIFO method, the cost of goods sold for each sale is: $\quad$ July 13 $\quad$$\quad$ July 22 a. $\$ 600 \quad\quad\quad \$ 240$ b. $640 \quad\quad\quad\quad 300$ c. $650 \quad\quad\quad\quad 300$ d. $750 \quad\quad\quad\quad 260$

During July, the following purchases and sales were made by Big Dan Company. There was no beginning inventory. Big Dan Company uses a perpetual inventory system. Purchases Sales July 3 40 units @ \ 12 July 13 50 units 11 40 units @ \ 13 22 20 units 20 20 units @ \ 15 Under the FIFO method, the cost of goods sold for each sale is: $\quad$ July 13 $\quad$$\quad$ July 22 a. $\$ 600 \quad\quad\quad \$ 240$ b. $610 \quad\quad\quad\quad 260$ c. $650 \quad\quad\quad\quad 260$ d. $750 \quad\quad\quad\quad 300$

H. Hunter Company's records indicate the following information for the year: Merchandise inventory, 1/1 \ 550,000 Purchases 2,250,000 Net sales 3,200,000 On December 31, a physical inventory determined that ending inventory of $500,000 was in the warehouse. H. Hunter's gross profit on sales has remained constant at 30%. H. Hunter suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory?

Inventory is

LIFO can be used

Romanoff Industries had the following inventory transactions occur during 2015: Units Cost/unit 2/1/15 Purchase 54 \ 45 3/14/15 Purchase 93 \ 47 5/1/15 Purchase 66 \ 49 The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using LIFO? (rounded to whole dollars)