Exam 6: Inventories

If the unit price of inventory is increasing during a period a company using the LIFO inventory method will show less gross profit for the period than if it had used the FIFO inventory method.

Inventory is

At December 31 2016 the following information was available for Deen Company: ending inventory $22600; beginning inventory $21400; cost of goods sold $171000; and sales revenue $430000. Calculate the inventory turnover and days in inventory for Deen.

GAAP defines market for lower-of-cost-or market essentially as

Accounting for inventories is important because inventories affect the ______________ section of the balance sheet and the ______________ section on the income statement.

Cost of goods sold is computed from the following equation:

The ______________ method tracks the actual physical flow of each unit of inventory available for sale; however management may be able to manipulate ______________ by using this method.

Allen's Hardware Store prepared the following analysis of cost of goods sold for the previous three years: Beginning inventory 1 / 1 \4 0,000 \1 8,000 \2 5,000 Cost of goods purchased Cost of goods available for sale 90,000 73,000 95,000 Ending inventory 12/31 Cost of goods sold Net income for the years 2015 2016 and 2017 was $75000 $60000 and $57000 respectively. Since net income was consistently declining Mr. Baden hired a new accountant to investigate the cause(s) for the declines. The accountant determined the following: 1. Purchases of $20000 were not recorded in 2015. 2. The 2015 December 31 inventory should have been $26000. 3. The 2016 ending inventory included inventory costing $8000 that was purchased FOB destination and in transit at year end. 4. The 2017 ending inventory did not include goods costing $4000 that were shipped on December 29 to Wilson Plumbing Company FOB shipping point. The goods were still in transit at the end of the year. Instructions Determine the correct net income for each year. (Show all computations.)

When valuing ending inventory under a perpetual inventory system the

Berry Inc. has 6 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $900. At the statement date each computer has a current replacement cost of $450. How much loss should Berry Inc. record for the year?

Inventory turnover is calculated as cost of goods sold divided by ending inventory.

A company just starting business made the following four inventory purchases in June: June 1 150 units \ 390 June 10 200 units 598 June 15 200 units 630 June 28 150 units A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method the value of the ending inventory on June 30 is