Exam 6: Reporting and Analyzing Inventory

Charlene Cosmetics Company just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is

What is the LIFO reserve? What are the consequences of ignoring a large LIFO reserve when analyzing a company?

When the average cost method is applied in a perpetual inventory system, the sale of goods will change the unit cost that remains in inventory.

Plato Company reports the following for the month of June. Instructions (a) Calculate the cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. Assume a sale of 570 units occurred on June 15 for a selling price of $8 and a sale of 600 units on June 27 for $9. (Note: For the average-cost method, round unit cost to three decimal places.) (b) Why is the average unit cost not $6 [($5 + $6 + $7) / 3 = $6]?

An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is

Condensed income statements for Werly Corporation are shown below for two years. Compute the corrected net income for 2013 and 2014 assuming that the inventory as of the end of 2013 was mistakenly overstated by $5,000. 2013 $ __________ 2014 $__________

The requirement that companies use the same cost flow assumption of all goods of a similar nature is found in

When a business holds goods of other parties without taking ownership, and tries to sell them for a fee, the goods are called ____________ goods.

The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as the

Piper Pipes has the following inventory data: Assuming that a periodic inventory system is used, what is the cost of goods sold on a LIFO basis.

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO adjustment, what is Boxter's inventory turnover ratio for 2014 (to the closest decimal place)?"

The LIFO inventory method tends to smooth out the peaks and valleys of a business cycle.

The option to value inventory at fair value exists under

In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense?

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to:

The specific identification method of inventory valuation is desirable when a company sells a large number of low-unit cost items.

Baker Bakery Company just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is

The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer's inventory turnover in 2014 was

The following information is available for Wallace Company for 2014. Wallace uses the LIFO inventory method. Beginning inventory 600,000 Ending inventory 700,000 Beginning LIFO reserve 200,000 Ending LIFO reserve 300,000 Cost of goods sold 5,980,000 Sales 8,000,000 Instructions (a) Calculate the inventory turnover and days in inventory for Wallace Company based on LIFO. (b) Calculate the inventory turnover and days in inventory after adjusting for the LIFO reserve.

Compute the cost to be assigned to ending inventory for each of the methods indicated given the following information about purchases and sales during the year.