Exam 11: Short-Term Operating Assets: Inventory

Flynn Company uses LIFO for tax purposes and external reporting purposes.For internal reporting purposes,Flynn Company uses FIFO. Required: List a few reasons why a company uses different inventory costing methods for different purposes.

The Geewhiz Company uses the perpetual inventory system.The Geewhiz Company has the following data available for the month of January: Determine the cost of the ending inventory using the following methods: a.FIFO b.LIFO c.Moving-average (Round per unit costs to four decimal places and all other dollar amounts to two decimal places.)

The LIFO effect is ________.

On June 1,Kennedy Company purchased $5,000 of inventory on account from Sterner Company.Sterner Company offers a 3% discount if payment is received within 15 days.Kennedy Company records the purchase using the net method and the perpetual inventory system.The journal entry on June 1 by Kennedy Company includes ________.

Jones Company has the following data available: If Jones Company uses a perpetual LIFO inventory system,the cost of ending inventory on October 31 is ________.

Inventory costs do not include ________.

The following information is available for the month of June for a retail store: Required: Calculate the ending inventory at cost using the conventional retail method.Round ratios to four decimal places.(For example,0.40127 = 0.4013)

Cohen Company follows U.S.GAAP and uses the lower-of-cost-or-market rule for inventory.At December 31,2015,the following data is available: Cohen Company's balance sheet at December 31,2015 reports the following: Required: Determine the correct balance for inventory at December 31,2015.

Freight-in costs are treated as a selling expense.

A company uses the basic retail method to estimate the cost of ending inventory for interim financial statements.Which of the following responses describe the correct treatment of markups and markdowns in the calculation of the cost-to-retail ratio?

Destiny Industries reports beginning inventory of $253,000,purchases of $556,000,and ending inventory of $195,000.What is the cost of goods sold?

The Siempre Store has the following data for inventory: The store uses the LIFO retail method.Round all ratios to four decimal places.What is the cost of the ending inventory at March 31?

Goodee Bakery is considering a change in its inventory valuation method.Goodee Bakery currently uses the FIFO method and is considering a change to the LIFO method.Goodee Bakery started the year on January 1 with inventory at a FIFO cost of $22,000 and a LIFO cost of $20,500.The ending inventory on December 31 is $24,750 at FIFO cost and $21,800 at LIFO cost.The LIFO effect is ________.

Smith Company uses the LIFO retail inventory method for inventory costing.Smith Company has beginning inventory with a cost of $20,000 and a retail value of $40,000.During the year,the company purchases goods with a cost basis of $80,000 and a retail basis of $100,000.Sales are $60,000 at retail.Net markups are $5,000 and net markdowns are $5,000.Under the LIFO retail inventory method,which cost-to-retail ratios are used to determine the cost of ending inventory?