Exam 6: Inventory

After a physical count, the ending inventory is adjusted. Where on the balance sheet is the ending inventory shown?

Counting inventory on December 31 that was shipped FOB shipping point would not cause any error in the final inventory valuation.

Nicola Company reports the following inventory information: What is the total value of the merchandise under LNRV M (lower of cost or net realizable value)? Show all your calculations.

Rick Company's beginning inventory and purchases during the fiscal year ended December 31, 2012 were as follows: (NOTE: The company uses a perpetual system of inventory.) What is the cost of goods sold for Rick Company for 2012 using FIFO showing detailed calculations.

The inventory system whereby the merchandise inventory account balance is merely a record of the most recent physical inventory count is called the:

When is an item considered to be material?

Net sales minus estimated gross profit yields the estimated __________.

The ending inventory of one year becomes the beginning inventory of the next year.

Which is usually NOT a common practice in taking a physical inventory?

Inventory turnover equals the cost of goods sold divided by ending inventory.

Which method of valuing inventory is based on the average of units?

2012 ending inventory is $25,000; 2013 ending inventory is $19,500; 2014 ending inventory is $22,000; and cost of goods sold is $65,500 for 2014 and $67,900 for 2013. What is the days in inventory for 2013 and 2014? Has it improved?

The last step in using the gross profit method to estimate ending inventory is to:

If the ending inventory in Period 1 is understated, gross profit for Year 1 is __________.

Casey Company's beginning inventory and purchases during the fiscal year ended December 31, 2012 were as follows: (NOTE: The company uses a perpetual system of inventory.) What is the ending inventory of Casey Company for 2012 using FIFO?

Inventory is often the largest:

If a misstatement of inventory occurs, the net income for __________ periods will be misstated.

Journalize the following transactions for the next three independent situations. Case 1 Gertrude Enterprises has determined that the replacement cost (current market value) of the December 31, 2014 ending inventory is $32,400.The inventory is recorded on the balance sheet at $33,500. What is the journal entry using the lower of cost or net realizable value rule? Case 2 Austin's Jewellers carries a line of silver bracelets. Austin's Jewellers uses the FIFO method and a perpetual inventory system. The sales price of each bracelet is $105. Company records indicate the following activity for the bracelets for the month of March: Purchases of 200 units on January 1 at a cost of $30 per unit and purchases of 400 units on February 1 at a cost of $33 per unit. Sold 300 units on account on February 25. Journalize the sale of 300 units. Case 3 On January 2, 2014, Bright Lights purchased showroom fixtures for $10,000 cash, expecting the fixtures to remain in service for five years. Bright Lights has depreciated the fixtures on a straight-line basis, with zero residual value. On September 30, 2015, Bright Lights sold the fixtures for $5,000 cash. Record both the depreciation expense on the fixtures for 2015 and the sale of the fixtures on September 30, 2015.

Goods available for sale are $85,000; beginning inventory is $27,000; ending inventory is $19,000; and cost of goods sold is $63,500. What is the inventory turnover?

What is the method used to estimate the cost of ending inventory?