Exam 6: Inventories

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

All inventories are reported as current assets on the statement of financial position.

The consistent application of an inventory costing method is essential for

In a perpetual inventory system, the cost of goods sold under the FIFO method is based on the cost of the latest goods on hand during the period.

Beginning inventory plus the cost of goods purchased equals

In a period of rising prices, the inventory method which tends to report the lowest inventory is

Vestle Company uses the periodic inventory system.For January 2011, the beginning inventory consisted of 12,000 units that cost CHF12 each.During the month, the company made two purchases: 5,000 units at CHF13 each and 20,000 units at CHF13.50 each.Vestle sold 21,500 units during the month for CHF19.50 per unit.Using the average-cost method, what is the amount of cost of goods sold for the month of January 2011 (round per unit amount to two decimal places)?

The accountant at Paige Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or average-cost as an inventory costing method.The tax rate is 30% and the FIFO method will result in income before taxes of $9,100.The average-cost method will result in income before taxes of $8,225.What is the difference in tax that would be paid between the two methods?

For the current month, the beginning inventory of Elipresse Inc. consisted of 3 units that cost CHF6,500 each. During the month, the company made two purchases: 4 units at $\mathrm{CHF} 6,800$ each and 1 units at CHF6,750. Elipresse sold 5 units during the month. If Elipresse uses specific identification and wishes to maximize net income, the units costs allocated to cost of goods sold will be:

The inventory reported on Lazzard Company's statement of financial position is understated by $£ 1,250,000$ . The company's reported net income for the period will be

If the inventory reported on the statement of financial position is understated, then net income reported on the income statement is understated.

Godchaux Inc. took a physical inventory at December 31, 2010 and determined that $€ 275,000$ of goods were on hand. In addition, the following items were not included in the physical count: (1) $€ 60,000$ of goods were in transit, shipped f.o.b. destination (goods were received by Godchau $\times$ three days on January,3 2011) and (2) the company shipped f.o.b. destination $€ 25,000$ worth of inventory on December 29 . The goods arrived at the buyer's place of business on January 2, 2011. What amount should Godchaux report as inventory at the end of $2010 ?$

If companies have identical inventory costs but use different inventory flow assumptions when the price of goods have not been constant, then the

Carlsberg Corporation has 1,000 units of product#1and 2,000 units of product#2 in its inventory at December 31, 2011.Specific data with respect to each product follows: Produc\#1 Produc\#2 Historical cost CHF40 CHF70 Net realizable value 45 54 What amount will be reported on the company statement of financial position at December 31,2011 for ending inventory using lower-of-cost-or-net realizable value?

An auto manufacturer would classify vehicles in various stages of production as

Holliday Company's inventory records show the following data: Units Cost/unit Inventory, January 1 5,000 4.50 Purchases: June 18 4,500 4.00 November 8 3,000 3.50 A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $£ 6$ each. The company has an effective tax rate of $20 \%$ . Holliday uses the periodic inventory method. If the company uses FIFO, what is the gross profit for the period?

Merchandise inventory is

Lee Industries had the following inventory transactions occur during 2011: Units Cost/unit 2/1/11 Purchase 54 \ 45 3/14/11 Purchase 93 \ 47 5/1/11 Purchase 66 \ 49 The company sold 153 units at $\$ 63$ 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)

Companies adopt different cost flow methods for each of the following reasons except

Lee Industries had the following inventory transactions occur during 2011: Units Cost/unit 2/1/11 Purchase 54 \ 45 3/14/11 Purchase 93 \ 47 5/1/11 Purchase 66 \ 49 The company sold 153 units at $\$ 63$ each and has a tax rate of $30 \%$ . Assuming that a periodic inventory system is used, what is the company's after-tax income using FIFO? (rounded to whole dollars)