Exam 6: Reporting and Analyzing Inventory

Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2014 are as follows: An end of the month (1/31/2014) inventory showed that 160 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

Inventory methods such as FIFO and LIFO deal more with flow of costs than with flow of goods.

FIFO and LIFO are the two most common cost flow assumptions made in costing inventories. The amounts assigned to the same inventory items on hand may be different under each cost flow assumption. If a company has no beginning inventory, explain the difference in ending inventory values under the FIFO and LIFO cost bases when the price of inventory items purchased during the period have been (1) increasing, (2) decreasing, and (3) remained constant.

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

Apple-A-Day 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 LIFO inventory method, the amount allocated to cost of goods sold for July is

Hanlin Company uses the periodic inventory system to account for inventories. Information related to Hanlin Company's inventory at January 31 is given below: Instructions 1. Show computations to value the ending inventory using the FIFO cost assumption if 600 units remain on hand at January 31. 2. Show computations to value the ending inventory using the weighted-average cost method if 600 units remain on hand at January 31. 3. Show computations to value the ending inventory using the LIFO cost assumption if 600 units remain on hand at January 31.

Burnham Company reported the following summarized annual data at the end of 2014: *Based on an ending FIFO inventory of $250,000. The income tax rate is 30%. The controller of the company is considering a switch from FIFO to LIFO. He has determined that on a LIFO basis, the ending inventory would have been $205,000. Instructions (a) Restate the summary information on a LIFO basis. (b) What effect, if any, would the proposed change have on Burnham's income tax expense, net income, and cash flows? (c) If you were an owner of this business, what would your reaction be to this proposed change?

Olympus Climbers Company has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

Atom 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 200 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is

In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

The inventory turnover is calculated by dividing cost of goods sold by

Inventory accounting under IFRS differs from GAAP in regard to

Which inventory costing method should a gasoline retailer use?

Your office is on the 68^th floor of your building. The CEO's office is on the 77^th floor. The two of you are waiting for an elevator one morning. The CEO states "Our prices are rising and I want the lowest net income for tax purposes and the highest ending inventory for external reporting purposes. Which inventory method should we use? Requirement You have three minutes to respond to the CEO. What is your response?

GAAP's provision for ownership of goods (goods-in-transit or consigned goods), as well as which costs to include in inventory, as compared to IFRS are:

Wolf Camera Shop Inc. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Instructions What amount should be reported on Wolf Camera Shop's financial statements, assuming the lower-of-cost-or-market rule is applied?

Echo Sound 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. The inventory method which results in the highest gross profit for June is

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Red Company's "days in inventory" for 2013 (to the closest decimal place)?"

A company purchased inventory as follows: 200 units at $5.00 300 units at $5.50 The average unit cost for inventory is

Under the LCM basis, market is defined as selling price, not current replacement cost.