Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

Eaton Electronics uses a periodic inventory system.On March 31, Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894).In April, the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634).In May, the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968).In June, Eaton sells two of these TVs (serial numbers 11534894 and 11542631).There were no additional purchases or sales during the remainder of the year. -Use the information above to answer the following question.Eaton Electronics uses the LIFO method.What is the cost of its ending inventory?

If inventory is updated periodically,which of the equations is correct?

In a period of rising prices,the inventory costing method that assigns a value to inventory that approximates current cost is:

For a manufacturer,inventory turnover refers to how many times:

Pinkney Company updates its inventory periodically.The company's beginning inventory was $5,000 and purchases were $10,600 during the year.The company's ending inventory count was $7,000. Required: Determine the amount of cost of goods sold for the year.

Alphabet Company, which uses the periodic inventory method, purchases different letters for resale.Alphabet had no beginning inventory.It purchased A thru G in January at $4 per letter.In February, it purchased H thru L at $6 per letter.It purchased M thru R in March at $7 per letter.It sold A, D, E, H, J and N in October.There were no additional purchases or sales during the remainder of the year. -Use the information above to answer the following question.If Alphabet Company uses the weighted average method,what is the cost of its ending inventory? (Round the per unit cost to two decimal places and then round your answer to the nearest whole dollar.)

In a period of falling prices,the inventory costing method that assigns a value to inventory that approximates current cost is:

Manning Company updates its inventory periodically.The company's beginning inventory was $2,700 and purchases were $5,600 during the year.The company's ending inventory count was $5,000.What was the amount of its cost of goods sold?

Which of the following would be in the raw materials inventory of a company making cheese?

Consider the following information for Maynor Company,which uses a perpetual inventory system: The company sold 25 units on May 1 and 20 units on October 28. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. Part a.FIFO Part b.LIFO Part c.Weighted Average

Inventory shipped FOB destination and in transit on the last day of the year should be included in:

Which of the following statements about the lower of cost or market rule is not correct?

Which of the following would be in the finished goods inventory of a company making cheese?

Which of the following statements is correct?

When the periodic inventory system is in use,the choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

Consignment inventory is reported on the balance sheet of the company holding the inventory.

The weighted average cost method uses the ______ cost for cost of goods sold on the income statement and the ______ cost for inventory on the balance sheet.

Delta Diamonds uses a periodic inventory system.The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $500,two were purchased on July 9 for $550 each,and two were purchased on September 23 for $600 each.On December 24,it sold one of the diamonds that was purchased on July 9.Using the LIFO method,its cost of goods sold equals:

In a period of rising prices,the inventory costing method that will cause the company to have the lowest cost of goods sold is:

Choose the appropriate letter to match the term and the definition.There are more definitions than terms. TERM 1.____ Days to Sell 2.____ FIFO 3.____ Inventory Turnover 4.____ LIFO 5.____ LIFO Conformity Rule 6.____ Lower of Cost or Market Rule 7.____ Specific Identification 8.____ Weighted Average Cost DEFINITION A.A valuation rule that requires Inventory to be written down when its market value falls below its cost. B.Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold. C.Beginning Inventory + Purchases - Ending Inventory D.Consists of products acquired in a finished condition,ready for sale without further processing. E.The expense that follows directly after Net Sales on a multiple step income statement. F.Goods a company is holding on behalf of the goods' owner. G.Goods that are held for sale in the normal course of business or are used to produce other goods for sale. H.Goods that are in the process of being manufactured. I.Inventory costing method that identifies the cost of the specific item that was sold. J.The inventory that starts the manufacturing process. K.Inventory that was in process and now is completed and ready for sale. L.Inventory items being transported. M.A measure of the average number of days from the time inventory is bought to the time it is sold. N.How many times (on average)that inventory has been bought or sold. O.Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting. P.Beginning Inventory + Purchases - Cost of Goods Sold Q.The difference between net sales and cost of goods sold. R.Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold. S.Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.