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

Checkers uses the periodic inventory system.For the current month, the beginning inventory consisted of 1,200 units that cost $12 each.During the month, the company made two purchases: 500 units at $13 each and 2,000 units at $13.50 each.Checkers also sold 2,150 units during the month.Using the average cost method, what is the amount of cost of goods sold for the month?

Morgan Manufacturing Company has the following account balances at year end: What amount should Morgan report as inventories in its statement of financial position?

The LIFO perpetual method results in the same ending inventory and cost of goods sold amounts as under the LIFO periodic method.

Tang, Inc.sells collectible jewelry on consignment from various manufacturers.Additionally, Tang sells its own line of specialty jewelry manufactured in-house.On December 31, 2011, during Tang, Inc 's annual inventory count, an inexperienced new staff member included in Tang's ending inventory $350,000 worth of inventory held on consignment from Metcalf Associates.Which of the following is correct regarding the impact of this error on Tang's income statement and statement of financial position at December 31, 2011?

Use the following information for questions. Hudson, Inc.is a calendar-year corporation.Its financial statements for the years 2011 and 2010 contained errors as follows: -Assume that no correcting entries were made at December 31, 2010.Ignoring income taxes, by how much will retained earnings at December 31, 2011 be overstated or understated?

Which of the following is a product cost as it relates to inventory?

Risers Inc.reported total assets of $1,600,000 and net income of $85,000 for the current year.Risers determined that inventory was understated by $23,000 at the beginning of the year and $10,000 at the end of the year.What is the corrected amount for total assets and net income for the year?

Use the following information for RF Company had January 1 inventory of $100,000 when it adopted dollar-value LIFO.During the year, purchases were $600,000 and sales were $1,000,000.December 31 inventory at year-end prices was $143,360, and the price index was 112. -What is RF Company's ending inventory?

The change in the LIFO Reserve from one period to the next is recorded as an adjustment to Cost of Goods Sold.

Milford Company had 500 units of "Tank" in its inventory at a cost of $4 each.It purchased, for $2,800, 300 more units of "Tank".Milford then sold 400 units at a selling price of $10 each, resulting in a gross profit of $1,600.The cost flow assumption used by Johnson

Feine Co.accepted delivery of merchandise which it purchased on account.As of December 31, Feine had recorded the transaction, but did not include the merchandise in its inventory.The effect of this on its financial statements for December 31 would be

Use the following information for questions. Hudson, Inc.is a calendar-year corporation.Its financial statements for the years 2011 and 2010 contained errors as follows: -The following information is available for Naab Company for 2010: The cost of goods sold is equal to 400% of selling expenses.What is the cost of goods available for sale?

Use the following information for questions. Transactions for the month of June were: -Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is

Which of the following is a characteristic of a perpetual inventory system?

Which of the following is a reason why the specific identification method may be considered ideal for assigning costs to inventory and cost of goods sold?

Freight charges on goods purchased are considered a period cost and therefore are not part of the cost of the inventory.

Walsh Retailers purchased merchandise with a list price of $50,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable.Walsh should record the cost of this merchandise as

Use the following information for Hay Company had January 1 inventory of $100,000 when it adopted dollar-value LIFO.During the year, purchases were $600,000 and sales were $1,000,000.December 31 inventory at year-end prices was $126,500, and the price index was 110. -What is Hay Company's ending inventory?

Use the following information for questions. Niles Co.has the following data related to an item of inventory: -Emley Company has been using the average cost method of inventory valuation for 10 years, since it began operations.Its 2010 ending inventory was $40,000, but it would have been $60,000 if FIFO had been used.Thus, if FIFO had been used, Emley's income before income taxes would have been

Use the following information for questions. The following information was available from the inventory records of Rich Company for January: -Assuming that Rich maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar?