Exam 6: Reporting and Analyzing Inventory

Grape Gratuities Company has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 25 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is

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

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 manager of Weiser is given a bonus based on net income before taxes. The net income after taxes is $35,700 for FIFO and $29,400 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 LIFO reserve is the difference between ending inventory using LIFO and ending inventory if FIFO were used instead.

Hess Company's inventory records show the following data for the month of September: A physical inventory on September 30 shows 150 units on hand. Calculate the value of ending inventory and cost of goods sold if the company uses FIFO inventory costing and a periodic inventory system.

Trumpeting Trumpets has the following inventory data: Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis.

Whitman Corporation sells six different products. The following information is available on December 31: When applying the lower of cost or market rule to each item, what will Whitman's total ending inventory balance be?

If the ownership of merchandise passes to the buyer when the seller ships the merchandise, the terms are stated as FOB destination.

Nelson Corporation sells three different products. The following information is available on December 31: When applying the lower of cost or market rule to each item, what will Nelson's total ending inventory balance be?

In accounting for inventory, the assumed flow of costs must match the physical flow of goods.

Dalton Company was undergoing an end of year audit of its financial records. The auditors were in the process of reviewing Dalton's inventory for year end, December 31, 2014. They completed an end of year inventory. The value of the ending inventory prior to any adjustments was $185,000, but before finishing up they had a few questions. Discussion with Dalton's accountant revealed the following: (a) Dalton sold goods costing $60,000 to Summey Company FOB shipping point on December 28. The goods are not expected to reach Summey until January 12. The goods were not included in the physical inventory because they were not in the warehouse. (b) The physical count of the inventory did not include goods costing $95,000 that were shipped to Dalton FOB destination on December 27 and were still in transit at year-end. (c) Dalton received goods costing $25,000 on January 2. The goods were shipped FOB shipping point on December 26 by Strong Company. The goods were not included in the physical count. (d) Dalton sold goods costing $40,000 to Hampton Company FOB destination on December 30. The goods were received by Hampton Company on January 8. Because the goods had been shipped, they were excluded from the physical inventory count. (e) Dalton received goods costing $42,000 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was suppose to arrive December 31. This purchase was included in the ending inventory of $192,000. (f) Dalton Company, as the consignee, had goods on consignment that cost $3,000. Because these goods were on hand as of December 31, they were included in the physical inventory count. Instructions Analyze the above information and calculate a corrected amount for the ending inventory. Explain the basis for your treatment of each item.

The accountant at Landry Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $8,740. The LIFO method will result in income before taxes of $8,100. What is the difference in tax that would be paid between the two methods?

Glenda Carson is studying for the next accounting midterm examination. What should Glenda know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method?

The LIFO inventory method agrees with the actual physical movement of goods in most businesses.

The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $600 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?

The consistent application of an inventory costing method enhances

Days in inventory is calculated by dividing 365 days by

Selection of an inventory costing method by management does not usually depend on

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is