Nicholas Industries had the following inventory transactions occur during 2014: \[\begin{array} { l l c c } && \text { Units } & \text { Cost/unit } \\ 2 / 1 / 16 & \text { Purchase } & 54 & \$ 45 \\ 3 / 14 / 16 & \text { Purchase } & 93 & \$ 47 \\ 5 / 1 / 16 & \text { Purchase } & 66 & \$ 49 \end{array}\] The company sold 140 units at $65 each and has a tax rate of 30%. Assuming that a periodic inventory system is used what is the company's gross profit using FIFO? (rounded to whole dollars)

A) $2388 B) $2628 C) $6472 D) $6712 A) $2388 B) $2628 C) $6472 D) $6712

The following information is available for Clancy Company: $\begin{array}{ll} \text { Beginning inventory } & 600 \text { units at } \$ 4 \\ \text { First purchase } & 900 \text { units at } \$ 6 \\ \text { Second purchase } & 500 \text { units at } \$ 7.20 \end{array}$ Assume that Clancy uses a periodic inventory system and that there are 760 units left at the end of the month. Instructions Compute each of the following under the average-cost method: (a) Cost of ending inventory. (b) Cost of goods sold.

\[\begin{array} { l } \text { Average c

Elly Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: \[\begin{array} { l c c r } & \text { Units } & \text { Per unit price } & \text { Total } \\ \hline\text { Balance, } 1 / 1 / 16 & 200 & \$ 5.00 & \$ 1,000 \\ \text { Purchase, } 1 / 15 / 16 & 100 & 5.30 & 530 \\ \text { Purchase, } 1 / 28 / 16 & 100 & 5.50 & 550 \end{array}\] An end of the month (1/31/16) inventory showed that 150 units were on hand. If the company uses LIFO what is the value of the ending inventory?

A) $750 B) $805 C) $850 D) $815 A) $750 B) $805 C) $850 D) $815

A company just starting business made the following four inventory purchases in June: \[\begin{array} { r r r r } \text { June } & 1 & 150 \text { units } & \$ 390 \\ \text { June } & 10 & 200 \text { units } & 598 \\ \text { June } & 15 & 200 \text { units } & 630 \\ \text { June }& 28 & 150 \text { units } & \underline { 510 } \\ & & & \underline { \$ 2,128 } \end{array}\] A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the FIFO inventory method the amount allocated to cost of goods sold for June is

A) $540. B) $668. C) $1460. D) $1588. A) $540. B) $668. C) $1460. D) $1588.

Henri Company's inventory records show the following data: $\begin{array}{llrr} &&\text { Units }&\text { Unit Cost }\\ \text { Inventory,}&\text { January 1 } & 10,000 & \$ 9.20 \\ \text { Purchases: } & \text { June } 18 & 9,000 & 8.00 \\ &\text { November 8 } & 6,000 & 7.25 \end{array}$ A physical inventory on December 31 shows 3000 units on hand. Henri sells the units for $12 each. The company has an effective tax rate of 20%. Henri uses the periodic inventory method. What is the cost of goods available for sale?

A) $170700 B) $178500 C) $207500 D) $300000 A) $170700 B) $178500 C) $207500 D) $300000

Heathroton Company's goods in transit at December 31 include: $\begin{array}{lrr} \underline{ \text { sales made } } & \underline{\text { purchases made } } \\ \text { (1) FOB destination } &\text { (3) FOB destination } \\ \text { (2) FOB shipping point } &\text { (4) FOB shipping point } \end{array}$ Which items should be included in Fetherston's inventory at December 31?

A) (2) and (3) B) (1) and (4) C) (1) and (3) D) (2) and (4) A) (2) and (3) B) (1) and (4) C) (1) and (3) D) (2) and (4)

An error in the physical count of goods on hand at the end of a period resulted in a $18000 overstatement of the ending inventory. The effect of this error in the current period is $\begin{array}{cc} \text { Cost of Goods Sold } & \text { Net Incom } \\\end{array}$ A) $\begin{array}{cc} \text { Understated } && \text { Understated } \\\end{array}$ B)$\begin{array}{cc} \text { Over stand } &&& \text { Over stand } \\\end{array}$ C)$\begin{array}{cc} \text { Understated } &&& \text { Over stand } \\\end{array}$ D)$\begin{array}{cc} \text { Over stand } &&& \text { Understated } \\\end{array}$

The answer of An error in the physical count of...

Exam 6: Inventories

Nicholas Industries had the following inventory transactions occur during 2014: Units Cost/unit 2/1/16 Purchase 54 \ 45 3/14/16 Purchase 93 \ 47 5/1/16 Purchase 66 \ 49 The company sold 140 units at $65 each and has a tax rate of 30%. Assuming that a periodic inventory system is used what is the company's gross profit using FIFO? (rounded to whole dollars)

(Multiple Choice)

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Question 121

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.

(True/False)

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Question 122

If a company has no beginning inventory and the unit cost of inventory items does not change during the year the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

(True/False)

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Question 123

Beginning inventory plus the cost of goods purchased equals

(Multiple Choice)

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Question 124

The retail inventory method requires a company to value its inventory on the balance sheet at retail prices.

(True/False)

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Question 125

The following information is available for Clancy Company: Beginning inventory 600 units at \ 4 First purchase 900 units at \ 6 Second purchase 500 units at \ 7.20 Assume that Clancy uses a periodic inventory system and that there are 760 units left at the end of the month. Instructions Compute each of the following under the average-cost method: (a) Cost of ending inventory. (b) Cost of goods sold.

(Essay)

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Question 126

As a result of a thorough physical inventory Greeley Company determined that it had inventory worth $325000 at December 31 2016. This count did not take into consideration the following facts: Walker Consignment currently has goods worth $47000 on its sales floor that belong to Greeley but are being sold on consignment by Walker. The selling price of these goods is $75000. Greeley purchased $22000 of goods that were shipped on December 27. FOB destination that will be received by Greeley on January 3. Determine the correct amount of inventory that Greeley should report.

(Multiple Choice)

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Question 127

Elly Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: Units Per unit price Total Balance, 1/1/16 200 \ 5.00 \ 1,000 Purchase, 1/15/16 100 5.30 530 Purchase, 1/28/16 100 5.50 550 An end of the month (1/31/16) inventory showed that 150 units were on hand. If the company uses LIFO what is the value of the ending inventory?

(Multiple Choice)

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Question 128

Inventoriable costs include all of the following except the

(Multiple Choice)

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Question 129

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 FIFO inventory method the amount allocated to cost of goods sold for June is

(Multiple Choice)

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Question 130

In periods of rising prices the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

(Multiple Choice)

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Question 131

The convergence issue that will be most difficult to resolve in the area of inventory accounting is:

(Multiple Choice)

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Question 132

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $65; Second purchase $78; Third purchase $68. If the company sold two units for a total of $200 and used FIFO costing the gross profit for the period would be

(Multiple Choice)

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Question 133

Henri 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 7.25 A physical inventory on December 31 shows 3000 units on hand. Henri sells the units for $12 each. The company has an effective tax rate of 20%. Henri uses the periodic inventory method. What is the cost of goods available for sale?

(Multiple Choice)

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Question 134

Items waiting to be used in production are considered to be

(Multiple Choice)

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Question 135

Talkington Rae Company reports goods available for sale at cost $76800. Beginning inventory at retail is $40000 and goods purchased during the period at retail were $80000. Sales for the period amounted to $85000. Instructions Determine the estimated cost of the ending inventory using the retail inventory method.

(Essay)

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Question 136

If goods in transit are shipped FOB destination

(Multiple Choice)

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Question 137

The first-in first-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

(True/False)

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Question 138

Heathroton Company's goods in transit at December 31 include: (1) FOB destination (3) FOB destination (2) FOB shipping point (4) FOB shipping point Which items should be included in Fetherston's inventory at December 31?

(Multiple Choice)

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Question 139

An error in the physical count of goods on hand at the end of a period resulted in a $18000 overstatement of the ending inventory. The effect of this error in the current period is Cost of Goods Sold Net Incom A) Understated Understated B) Over stand Over stand C) Understated Over stand D) Over stand Understated

(Short Answer)

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Question 140

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.

If a company has no beginning inventory and the unit cost of inventory items does not change during the year the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

Beginning inventory plus the cost of goods purchased equals

The retail inventory method requires a company to value its inventory on the balance sheet at retail prices.

Inventoriable costs include all of the following except the

In periods of rising prices the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

The convergence issue that will be most difficult to resolve in the area of inventory accounting is:

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $65; Second purchase $78; Third purchase $68. If the company sold two units for a total of $200 and used FIFO costing the gross profit for the period would be

Items waiting to be used in production are considered to be

If goods in transit are shipped FOB destination

The first-in first-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

Heathroton Company's goods in transit at December 31 include: (1) FOB destination (3) FOB destination (2) FOB shipping point (4) FOB shipping point Which items should be included in Fetherston's inventory at December 31?

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