Exam 6: Inventories

The manager of Yates Company is given a bonus based on income before income taxes. Net income, after taxes, is $5,600 for FIFO and $5,040 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

The accountant at Reber Company has determined that income before income taxes amounted to $6,750 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $225 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?

Which costing method cannot be used to determine the cost of inventory items before lower-of-cost-or-market is applied?

The term "FOB" denotes

Compute the lower-of-cost-or-market valuation for Aber Company's total inventory based on the following:

Moore Company reported net income of $60,000 in 2010 and $80,000 in 2011. However, ending inventory was overstated by $5,000 in 2010. Instructions Compute the correct net income for Moore Company for 2010 and 2011.

Which one of the following inventory methods is often impractical to use?

The lower-of-cost-or-market basis is an example of the accounting concept of conservatism.

Holliday Company's inventory records show the following data: A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method. The weighted-average cost per unit is

Shandy Shutters has the following inventory information. A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is

Graves Pharmacy reported cost of goods sold as follows: Hill, the bookkeeper, made two errors: (1) 2010 ending inventory was overstated by $6,000. (2) 2011 ending inventory was understated by $15,000. Instructions Assuming the errors had not been corrected, indicate the dollar effect that the errors had on the items appearing on the financial statements listed below. Also indicate if the amounts are overstated (O) or understated (U).

Manufacturer usually classify inventory into all the following general categories except:

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

The cost of goods purchased during a period plus the beginning inventory is the amount of goods ________________ during the period.

Inventory turnover is calculated by dividing cost of goods sold by

The Entertainment Center accumulates the following cost and market data at December 31. What is the lower-of-cost-or-market value of the inventory?

Holliday Company's inventory records show the following data: A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method. What is the cost of goods available for sale?

The following accounts are included in the ledger of Dean Company: Advertising expense Freight-in Inventory Purchases Purchase returns and allowances Sales Sales returns and allowances Which of the accounts would be included in calculating cost of goods sold?

Understating beginning inventory will understate

Shandy Shutters has the following inventory information. A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand. Assume a periodic inventory system is used. Cost of goods sold under the average-cost method is