Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using FIFO. \[\begin{array} { | r | l | l | l | } \hline \text { Date } & \text { Activities } & \text { Units Acquired at Cost } & \text { Units Sold at Retail } \\ \hline \text { May } 1 & \text { Beginning Inventory } & 150 \text { units } @ \$ 10.00 & \\ \hline 5 & \text { Purchase } & 220 \text { units } @ \$ 12.00 & \\ \hline 10 & \text { Sales } & & 140 \text { units } @ \$ 20.00 \\ \hline 15 & \text { Purchase } & 100 \text { units } @ \$ 13.00 & \\ \hline 24 & \text { Sales } & & 90 \text { units } @ \$ 21.00 \\ \hline \end{array}\]

A) $2,860 B) $2,590 C) $2,850 D) $2,460 E) $2,980 A) $2,860 B) $2,590 C) $2,850 D) $2,460 E) $2,980

Exam 6: Inventories and Cost of Sales

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available: Beginning inventory, January 1: $4,000 Net sales: $80,000 Net purchases: $78,000 The company's gross margin ratio is 25%. Using the gross profit method, the estimated ending inventory value would be:

(Multiple Choice)

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Question 181

Match each of the following terms with the appropriate definition.

Net realizable value

Financial statements prepared for periods of less than one year.

Conservatism constraint

The number of times a company's average inventory is sold during a period.

Inventory turnover

An estimate of days needed to convert the inventory at the end of the period into receivables or cash.

Correct Answer:

Verified

Net realizable value

Conservatism constraint

Inventory turnover

Interim statements.

Weighted average inventory method

Days’ sales in inventory

FIFO method

Retail inventory method

LIFO method

Specific identification method

(Matching)

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Question 182

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using FIFO. Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 150 units @\ 10.00 5 Purchase 220 units @\ 12.00 10 Sales 140 units @\ 20.00 15 Purchase 100 units @\ 13.00 24 Sales 90 units @\ 21.00

(Multiple Choice)

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Question 183

Physical counts of inventory:

(Multiple Choice)

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Question 184

Companies can and often do use different costing methods for financial reporting and tax reporting. An exception to this is the:

(Multiple Choice)

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Question 185

The understatement of the ending inventory balance causes:

(Multiple Choice)

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Question 186

Under FIFO, the most recent costs are assigned to ending inventory.

(True/False)

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Question 187

The choice of an inventory valuation method has little to no impact on gross profit and cost of sales.

(True/False)

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Question 188

If obsolete or damaged goods can be sold, they will be included in inventory at their original cost.

(True/False)

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Question 189

Physical counts of inventory:

Companies can and often do use different costing methods for financial reporting and tax reporting. An exception to this is the:

The understatement of the ending inventory balance causes:

Under FIFO, the most recent costs are assigned to ending inventory.

The choice of an inventory valuation method has little to no impact on gross profit and cost of sales.

If obsolete or damaged goods can be sold, they will be included in inventory at their original cost.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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