Queen Mattresses,Inc.had the following transactions occur during May 20X3.Assume there is no beginning inventory. \[\begin{array} { l l } \text { May } 2 & \text { Inventory was purchaped on account for } \$ 5,000 , \text { termh } 2 / 10,n / 30 . \\ \text { May } 3 & \text { Inventory coeting } \$ 1,000 \text { was returned. } \\ \text { May } 9 & \text { Paid for the inventory } \\ \text { May } 15 & \text { Inventory costing } \$ 2,200 \text { was sold on account for } \$ 3,800 \text {, terms } 3 / 10, \mathrm{n} / 45 \\ \text { May } 31 & \text { Intoningentrieg are prepared for the month-end financial statemente. } \end{array}\] If Queen Mattresses,Inc.were using the perpetual inventory system,what is the journal entry for May 2?

A) $\begin{array}{lll} \text { Inventory } & 5,000 & \\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$ B) $\begin{array}{lccc} \text { Purchases } & 4,900& \\ \quad \text { Accounts Payable } & & 4,900 \\ \end{array}$ C) $\begin{array}{lccc} \text { Purchases } & 5,000 & \\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$ D) $\begin{array}{lccc} \text { Inventory } & 4,900 & \\ \text { Cash Discounts on Purchases } & 100& \\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$ E) $\begin{array}{lccc} \text { Purchases } & 4,900& \\ \text { Cash Discounts on Purchases } &100&\\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$ A) $\begin{array}{lll} \text { Inventory } & 5,000 & \\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$ B) $\begin{array}{lccc} \text { Purchases } & 4,900& \\ \quad \text { Accounts Payable } & & 4,900 \\ \end{array}$ C) $\begin{array}{lccc} \text { Purchases } & 5,000 & \\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$ D) $\begin{array}{lccc} \text { Inventory } & 4,900 & \\ \text { Cash Discounts on Purchases } & 100& \\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$ E) $\begin{array}{lccc} \text { Purchases } & 4,900& \\ \text { Cash Discounts on Purchases } &100&\\ \quad \text { Accounts Payable } & & 5,000 \\ \end{array}$

Given the following data,what is cost of goods sold? \[\begin{array} { l c } \text { Fales revenue } & \$ 730,000\\ \text { Epginninginventory } & 80,000 \\ \text { Endinginventory } & 95,000 \\ \text { lumcheses of inventory } & 160,000 \end{array}\]

A) $585,000 B) $145,000 C) $570,000 D) $175,000 E) $555,000 A) $585,000 B) $145,000 C) $570,000 D) $175,000 E) $555,000

Tall Trees Gear uses the periodic inventory method and recorded the following inventory and purchase transactions for the month of August,20X3. \[\begin{array} { l l c l } \text { Bate } & \text { Tensection } & \text { Units } & \text { Unit Cost } \\ \text { Aug 1 } & \text { Beginning inventory } & 2,800 \text { units } & \text { @\$1.10 } \\ \text { Aug 3 } & \text { Purchase } & 500 \text { units } &@ \$ 1.20 \\ \text { Aug 10 } & \text { Purchase} & 300 \text { units } & @\$ 1.30 \\ \text { Aug 17 } & \text {Purchase } & 400 \text { units } & @\$ 1.40 \\ \text { Aug 24 } & \text {Purchase } & 700 \text { units } & @\$ 1.55 \end{array}\] Determine the ending inventory balance at August 31 and the cost of goods sold for the month of August,20X3 for Tall Trees Gear.Tall Trees Gear sold 3,200 units during August,20X3.On August 31,a physical inventory count was conducted,and 1,500 units were on hand.Assume the company uses the last-in-first-out (LIFO)cost flow assumption.

LIFO ending inventory Aug, 1 B.I. 1, 50t

Exam 7: Inventories and Cost of Goods Sold

Historically,periodic inventory systems have been used for low value,high volume items,whereas the perpetual inventory system has been used for high value,low volume items.

(True/False)

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Question 21

Inventory valuation is linked to gross profit because the inventory valuation involves allocating the cost of goods available for sale between cost of goods sold and ending inventory as of the balance sheet date.

(True/False)

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Question 22

Payton Industries had the following purchases as of September 30,20X3. September 3 order of 400 unit @\ 10.50 September 8 order of 100 unit @\ 11.00 September 19 order of 200 unite @\ 11.50 \ 4,204 1,100 2,300 \ 7,600 On September 20,20X3,the company sold 240 units at $16.00 per unit.On September 30,20X3,a competitor announced a new model which resulted in the cost of Payton's inventory dropping to the new replacement cost,which was $10.75 per unit.The net realizable value also declined.Payton Industries uses a perpetual inventory system. 1.What is the balance in the inventory account on September 30,20X3,if Payton Industries uses: a.FIFO? b.LIFO? 2.What journal entry is necessary on September 30,20X3,if Payton Industries uses lower-of-cost-or-market,where cost is defined as: a.FIFO? b.LIFO?

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Question 23

Queen Mattresses,Inc.had the following transactions occur during May 20X3.Assume there is no beginning inventory. May 2 Inventory was purchaped on account for \ 5,000, termh 2/10,n/30. May 3 Inventory coeting \ 1,000 was returned. May 9 Paid for the inventory May 15 Inventory costing \ 2,200 was sold on account for \ 3,800 , terms 3/10,/45 May 31 Intoningentrieg are prepared for the month-end financial statemente. If Queen Mattresses,Inc.were using the perpetual inventory system,what is the journal entry for May 2?

(Multiple Choice)

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Question 24

LIFO matches cost of goods sold to sales on the income statement more accurately than does FIFO.

(True/False)

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Question 25

Polltok Pools & Spas had cost of goods sold for July,20X3 totaling $670,000.Purchase Discounts used by Polltok Pools & Spas totaled $4,500 and discounts used by customers totaled $3,000.Sales returns were $2,000 while purchase returns were $ 3,800.Total purchases amounted to $700,000.The inventory balance on July 1,20X3 was $ 70,000.The company uses the periodic inventory system.Determine Polltok Pools & Spas' ending inventory.

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Question 26

When inventory prices are rising,all of the following are reasons for choosing the LIFO method versus the FIFO method except:

(Multiple Choice)

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Question 27

Under the periodic inventory system,freight-in is an additional part of cost of goods sold.

(True/False)

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Question 28

If a company uses a perpetual inventory system,it will maintain all the following accounts except:

(Multiple Choice)

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Question 29

U.S.tax law contains a conformity requirement that allows companies to use LIFO for tax purposes only if the companies use LIFO for financial reporting purposes.

(True/False)

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Question 30

Assuming inflation,which of the following statements incorrectly describes an attribute of,or the relationship among,inventory valuation methods?

(Multiple Choice)

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Question 31

Given the following data,what is cost of goods sold? Fales revenue \ 730,000 Epginninginventory 80,000 Endinginventory 95,000 lumcheses of inventory 160,000

(Multiple Choice)

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Question 32

The cost of merchandise acquired is the invoice price of the goods plus directly identifiable inbound transportation costs less any cash or quantity discounts and less any returns or allowances.

(True/False)

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Question 33

When prices and costs are rising,most companies that use LIFO

(Multiple Choice)

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Question 34

If the ending inventory is overstated by $18,000 in 20X3,and assuming a constant 30% tax rate,then what will be the effect on net income in 20X4?

(Multiple Choice)

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Question 35

On March 1,20X3,Environmental Impacts acquired inventory on account.The cost of the inventory was $85,000.The terms of the purchase were 2/10,n/30.Upon inspection of the inventory on March 2,$4,800 worth of inventory was returned.Environmental Impacts paid for the inventory on March 8.The company uses a periodic inventory system.What journal entry will Environmental Impacts make on March 8,20X3?

(Multiple Choice)

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Question 36

If a company is using a periodic inventory system,the balance in its inventory account three-quarters of the way through an accounting period would be equal to the

(Multiple Choice)

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Question 37

If unit costs and prices did not fluctuate,specific identification,LIFO,FIFO,and weighted-average would show the same ending inventory and cost of goods sold balances.

(True/False)

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Question 38

FIFO tends to decrease taxes when

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Question 39

Tall Trees Gear uses the periodic inventory method and recorded the following inventory and purchase transactions for the month of August,20X3. Bate Tensection Units Unit Cost Aug 1 Beginning inventory 2,800 units @ \1 .10 Aug 3 Purchase 500 units @\ 1.20 Aug 10 Purchase 300 units @\ 1.30 Aug 17 Purchase 400 units @\ 1.40 Aug 24 Purchase 700 units @\ 1.55 Determine the ending inventory balance at August 31 and the cost of goods sold for the month of August,20X3 for Tall Trees Gear.Tall Trees Gear sold 3,200 units during August,20X3.On August 31,a physical inventory count was conducted,and 1,500 units were on hand.Assume the company uses the last-in-first-out (LIFO)cost flow assumption.

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Question 40

Showing 21 - 40 of 120

Historically,periodic inventory systems have been used for low value,high volume items,whereas the perpetual inventory system has been used for high value,low volume items.

Inventory valuation is linked to gross profit because the inventory valuation involves allocating the cost of goods available for sale between cost of goods sold and ending inventory as of the balance sheet date.

LIFO matches cost of goods sold to sales on the income statement more accurately than does FIFO.

When inventory prices are rising,all of the following are reasons for choosing the LIFO method versus the FIFO method except:

Under the periodic inventory system,freight-in is an additional part of cost of goods sold.

If a company uses a perpetual inventory system,it will maintain all the following accounts except:

U.S.tax law contains a conformity requirement that allows companies to use LIFO for tax purposes only if the companies use LIFO for financial reporting purposes.

Assuming inflation,which of the following statements incorrectly describes an attribute of,or the relationship among,inventory valuation methods?

Given the following data,what is cost of goods sold? Fales revenue \ 730,000 Epginninginventory 80,000 Endinginventory 95,000 lumcheses of inventory 160,000

The cost of merchandise acquired is the invoice price of the goods plus directly identifiable inbound transportation costs less any cash or quantity discounts and less any returns or allowances.

When prices and costs are rising,most companies that use LIFO

If the ending inventory is overstated by $18,000 in 20X3,and assuming a constant 30% tax rate,then what will be the effect on net income in 20X4?

If a company is using a periodic inventory system,the balance in its inventory account three-quarters of the way through an accounting period would be equal to the

If unit costs and prices did not fluctuate,specific identification,LIFO,FIFO,and weighted-average would show the same ending inventory and cost of goods sold balances.

FIFO tends to decrease taxes when

Accounting: the Language of Business

Measuring Income to Assess Performance

Recording Transactions

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Statement of Cash Flows

Accounting for Sales

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