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

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, or December 31, 2011 and that no additional errors occurred in 2012.Ignoring income taxes, by how much will working capital at December 31, 2012 be overstated or understated?

Risers Inc.reported total assets of $1,200,000 and net income of $135,000 for the current year.Risers determined that inventory was overstated by $10,000 at the beginning of the year (this was not corrected).What is the corrected amount for total assets and net income for the year?

June Corp.sells one product and uses a perpetual inventory system.The beginning inventory consisted of 10 units that cost $20 per unit.During the current month, the company purchased 60 units at $20 each.Sales during the month totaled 45 units for $43 each.What is the cost of goods sold using the FIFO method?

Nichols Company had 500 units of "Dink" in its inventory at a cost of $5 each.It purchased, for $2,400, 300 more units of "Dink".Nichols then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,700.The cost flow assumption used by Kingman

Use the following information for questions. Niles Co.has the following data related to an item of inventory: -The value assigned to cost of goods sold if Niles uses FIFO is

Goods in transit, shipped FOB shipping point, are included in the buyer's statement of financial position at the time of delivery to the common carrier.

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 the proper correcting entries were made at December 31, 2010.By how much will 2011 income before taxes be overstated or understated?

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

Malone Corporation uses the perpetual inventory method.On March 1, it purchased $30,000 of inventory, terms 2\10, n\30.On March 3, Malone returned goods that cost $3,000.On March 9, Malone paid the supplier.On March 9, Malone should credit

How is a significant amount of consignment inventory reported in the statement of financial position?

Computers For You is a retailer specializing in selling computers and related equipment.During 2011, Computers For You sells $200,000 of merchandise to Sandcastles, Inc.Computers For You incurs $24,000 of freight costs associated with these sales.Which of the following is true regarding how this $24,000 is treated on the financial statements?

The International Accounting Standards Board requires the specific identification method in certain circumstances.Which of the following is likely to be a circumstance where the specific identification criteria can be met?

Mineral Makers (MM) Company keeps its inventory records using a perpetual system.At December 31, 2011, the unadjusted balance in the inventory account is $64,000.Through a physical count on December 31, 2011, MM determines that its actual merchandise inventory at year-end is $62,500.Which of the following is true regarding the statement of financial position and the income statement of MM at December 31, 2011?

Black Corporation uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes.The balance in the LIFO Reserve account at the end of 2010 was $60,000.The balance in the same account at the end of 2011 is $90,000.Black's Cost of Goods Sold account has a balance of $450,000 from sales transactions recorded during the year.What amount should Black report as Cost of Goods Sold in the 2011 income statement?

The cost flow assumption adopted must be consistent with the physical movement of the goods.

The International Accounting Standards Board (IASB) requires the specific identification method of inventory costing where individual items of inventory can be identified and costed.

If both purchases and ending inventory are overstated by the same amount, net income is not affected.

When inventory is misstated, its presentation lacks?

Keck Co.had 450 units of product A on hand at January 1, 2010, costing $42 each.Purchases of product A during January were as follows: A physical count on January 31, 2010 shows 600 units of product A on hand.The cost of the inventory at January 31, 2010 under the FIFO method is

What is consigned inventory?