Exam 6: Inventories

Consider the following inventory information: Cost pes \# units unit Beginning inventory, January 1 900 \ 300 Purchase, January 7 250 \ 350 Purchase, January 22 550 \ 325 Units sold in January 1,400 ?? Ending inventory, January 31 300 ?? 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.

Explain the meaning of net realizable value and when raw materials, work in progress and finished goods inventories need to be written down.

When can inventory be overstated under the absorption costing method? Explain the precautions within GAAP to prevent a potential overstatement of inventory under the absorption costing method.

Assume that ending inventory in fiscal 2019 is overstated by $1,000.What impact will this have on fiscal 2019 financial reporting?

Which of the following is a potential journal entry required after the inventory count under the periodic inventory system?

Use the chart provided below to determine the impact if a company forgets to include $3,500 of inventory that was shipped FOB shipping point on December 15, 2020 but was still in transit at year end. The purchase invoice was received before year end and appropriately included in the purchases and accounts payable. Goods included in inventory count Purchases recorded during the year 2020 2021 Beginning inventory + Purchases -Ending inventory =Cost of goods sold Operating expense NA NA Net income Assets Liabilities Equity

Assume that ending inventory in fiscal 2019 is overstated by $1,000.What impact will this have on fiscal 2019 financial reporting?

Explain how manufacturing companies can manipulate earnings through its production process. What should an auditor or financial statement user do to detect this type of manipulation?

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2019, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2019 financial reporting?

Using the following cost information regarding finished goods, what would be the ending value of the finished goods inventory if the market value of the goods is $200,000? Cost Materials \ 150,000 Costs to process into finished product 100,000

The inventory records of ZUP indicate the following regarding its best-selling product for the month of January: Units Unit cost Opening inventory 6,000 \ 4,00 Purchase 1 4,000 3.70 Sale 1 (3,600) Purchase 2 8,000 2.80 Sale 2 Ending inventory Required: Calculate the dollar amount of ending inventory and cost of goods sold under each of the following cost flow assumptions: a. Weighted-average cost, periodic inventory. b. First-in, first-out (FIFO), perpetual inventory. c. Weighted-average cost, perpetual inventory.

What costs are not included in the cost of inventories?

Which statement is correct about absorption costing?

What is the meaning of the terms "F.O.B. shipping point"?

A retailer has a standard mark-up of 50% on invoiced cost. At the year end, 200 out of 5,000 products had been discounted by 20% of retail price. Required: Calculate the estimated costs as a percentage of retail price, separately for regular and discounted products.

Use the chart provided below to determine the impact if a company forgets to include $3,500 of inventory that was shipped FOB shipping point on December 25, 2020 but was still in transit at year end. The purchase invoice was processed in fiscal 2021. Goods included in inventory count Purchases recorded during the year 2020 2021 Beginning inventory + Purchases -Ending inventory =Cost of goods sold Operating expense - - Net income Assets Liabilities Equity

Which statement is correct about using a cost flow assumption?

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2019, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2020 financial reporting?

Which transaction would be included in the year end inventory?

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2019, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2020 financial reporting?