Exam 5: Inventories and Cost of Goods Sold

Zebra Company overstated its December 31, 2016 inventory by $5,200.Which statement is true concerning Zebra's financial statement amounts for 2016?

Blenham, Inc.sells merchandise on credit.If a customer pays its balance due within the discount period, what is the effect of the payment on Blenham's accounting equation?

Texas Inc.sold merchandise to Fagin Corp.on December 28, 2016, with shipping terms of FOB destination.Fagin Corp.received the merchandise on January 3, 2017.Which one of the following statements is true?

Roki Inc.uses the periodic inventory system. June 1 On hand, 50 units @ \1 5.00 each \ 750.00 5 Purchased 115 units @, \1 5.10 each 1,736.50 14 Purchased 75 units @ \1 5.20 each Total cost of goods available for sale 30 On hand, 90 units ? If Roki uses the LIFO inventory method, the cost of goods sold for June would be

With the periodic inventory system, the inventory account is updated after each sale or purchase.

Roki Inc.uses the periodic inventory system. June 1 On hand, 50 units @ \1 5.00 each \ 750.00 5 Purchased 115 units @, \1 5.10 each 1,736.50 14 Purchased 75 units @ \1 5.20 each Total cost of goods available for sale 30 On hand, 90 units ? If Roki uses the weighted average cost inventory method, the amount assigned to the June 30th inventory would be

Finished goods are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale.

George's Department Store is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Sales \ 200,000 Purchases 90,000 Inventory (beginning) 23,000 Inventory (ending) 17,000 Purchase returns and allowances 3,000 Purchase discounts 7,000 Transportation-in 4,000 Sales discounts 8,000 Sales returns and allowances 5,000 -Refer to the account information for George's Department Store. Determine George's gross profit.

If a company overstates its ending inventory balance for 2017 by $10,000, and overstates its ending inventory balance for 2016 by $5,000 what are the effects on its net income for 2017 and 2016? ​ Effect on 2017 Net Income Effect on 2016 Net Income

The ____________________ method most nearly approximates replacement cost of inventory on the balance sheet.

Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in the following items: -Prices are declining; gross margin is higher with this method.

The lower of cost or market (LCM) rule violates the historical cost principle.

When an inventory system updates the Inventory account at the time of each sale, this is known as:

Sherman, Inc.counted its ending inventory as $178,000 at year-end, January 31, 2016.Upon review of the records, it was noted that the following items were in transit during the count: A)$2,000 of goods shipped by a supplier to Sherman sent FOB destination on January 31 were received February 5, and were not counted by Sherman. B)$5,000 of goods shipped by a supplier to Sherman sent FOB shipping point on January 30 were received February 2, and were not counted by Sherman. C)$6,000 of goods shipped by Sherman to a customer FOB shipping point on January 31 were received by the customer February 3, and were counted by Sherman. ​ Determine the correct inventory balance at January 31. A) $172,000 B) $174,000 C) $178,000 D) $177,000

Sales Discounts is classified as what type of account?

Match the terms with the descriptions related to merchandise sales and purchases. -Requires updating of the inventory account at the time of each purchase and each sale.

The cost of goods sold for Johnnie, Inc.totaled $1,305,000.Sales returns and purchase returns were $3,000 and $4,000, respectively.Purchases totaled $1,300,000.Discounts taken by Johnnie totaled $7,000, while discounts taken by customers totaled $5,000.Beginning inventory was $90,000.Determine the amount of ending inventory to be reported on Johnnie, Inc.'s balance sheet.

Sales revenue is an inflow of assets.

A LIFO reserve represents the amount by which cost of goods sold on a FIFO basis exceeds the cost of goods sold on a LIFO basis for the current year.

FIFO results in the least amount of income before taxes, assuming a period of rising prices.