Exam 6: Inventories

Given the following information, what would the ending inventory value per unit be on April 30 under the weighted-average method in a perpetual inventory system?

Explain why the absorption costing method is appropriate under GAAP.

Consider the following inventory information: Using the first-in, first-out (FIFO)method and the periodic inventory system, calculate the cost of goods sold in January and the cost of inventory on January 31.

A particular production process requires two types of raw materials to produce the end product. Each unit of finished product requires three units of raw material A and 2 units of raw material B, plus processing costs of $35. The following provides information on inventories at fiscal 2011 year-end: Required: a. Evaluate these inventories to determine the amount of write-down, if any. b. If the entry required in part (a)is not made in fiscal 2011, what is the effect on i)2011 and 2012 inventory on the balance sheet ii)2011 and 2012 cost of goods sold iii)2011 and 2012 net income iv)2011 and 2012 retained earnings

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2013 financial reporting?

Which statement is not correct about the perpetual inventory system for inventory management?

Which statement best explains the difference between the retail inventory and gross margin methods?

JP Corporation had net income of $1,000,000 for 2012. After issuing its financial statements, the corporation realized that it had failed to include inventory from one of its small warehouses for two years. Specifically, it forgot to include $20,000 on December 31, 2011 and $30,000 on December 31, 2012. Which of the following is true regarding JP's 2011 net income?

Explain the meaning of product costs and period costs. Discuss which costs should be included in the cost of inventories.

Muscle Concrete mixes concrete and trucks it to construction sites. The company uses a standard costing system for the batches of concrete produced. The company has a fleet of 10 mixing trucks, each of which goes on three runs per day, 350 days per year under normal circumstances. The standard costs are as follows: Standard costs per batch based on 1,050 batches per year Amount Raw material - gravel, sand, cement, chemicals $1,000 Wages 400 Variable overhead - mixing truck depreciation, diesel fuel, etc. 450 Fixed overhead - depreciation on raw materials silo 400 Total production cost per batch $2,250 Opening inventory cost - all raw materials 1,000,000 Ending inventory cost - all raw material 450,000 During 2013, the company received an unusually large order for a big construction project. As a result, Muscle Concrete had to extend its operating hours and days, temporarily increasing output to 1,250 batches for the year. The company used the first-in, first-out cost flow assumption. Actual variable costs approximated standard costs per batch. Depreciation rates established at the beginning of the year remain valid for the year. Required: Determine the amount of cost of goods sold for 2013.

Which goods in transit would not be recorded in the seller's inventory at year end?

What journal entry is required when inventory is sold during the year under the perpetual inventory system?

Which statement is correct?

What definition is used for "market" under IFRS and ASPE?

Lean Ltd. had a balance of $52,300 in the office supplies account at the start of the year. During the year, purchases of $141,700 were made and debited to office supplies account. At the end of the year, a physical count of the office supplies indicated $41,800 on hand. What was the office supplies expense for the year?

For each of the following independent scenarios, indicate the effect of the error (if any)on: i. 2012 net income; ii. 2013 net income; and iii. 2013 closing retained earnings. The company uses the periodic system of inventory and its fiscal year-end is December 31. Ignore income tax effects. Consider each of the following independent scenarios: a. Your analysis of inventory indicates that inventory at the end of 2012 was overstated by $27,000 due to an inventory count error. Inventory at the end of 20 13 was correctly stated. b. Invoices in the amount of $107,000 for inventory received in December 2012 were not entered on the books in 2012. They were recorded as purchases in January 2013 when they were paid. The goods were counted in the 2012 inventory count and included in ending inventory on the 2012 financial statements. c. Goods received on consignment amounting to $89,000 were included in the physical count of goods at the end of 2013 and included in ending inventory on the 2013 financial statements. d. For each of the three scenarios, provide the journal entry that should be recorded in 2013 to correct the error.

If the gross margin percentage used in the gross margin method were overstated (for example, 36% instead of 32%), what would happen?

Explain how fixed overhead costs should be accounted for if a plant is made idle due to a prolonged strike.

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2013 financial reporting?

Explain how a merchandising company can manipulate earnings through its year-end inventories. What can an auditor do to detect this type of manipulation?