Exam 5: Inventories and Cost of Sales

The cost of an inventory item includes its invoice cost minus any discount,plus any added or incidental costs necessary to put it in a place and condition for sale.

What advantages does a perpetual inventory system have over periodic inventory system?

Eastview Company uses a perpetual LIFO inventory system,and has the following purchases and sales: -What is the value of cost of goods sold?

Ulrich had cost of goods sold of $6.7 million,ending inventory of $2.2 million,and average inventory of $1.9 million.Its days' sales in inventory equals (round your final answer to the nearest whole number):

An error in the ending inventory balance will cause an error in the calculation of cost of goods sold.

Goods that are in transit and were shipped FOB destination should be included in the inventory records of the ________.

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

Companies can and often do use different costing methods for financial reporting and tax reporting.An exception to this is the:

The inventory turnover ratio is calculated as:

A company's normal selling price for its product is $20 per unit.However,due to market competition,the selling price has fallen to $15 per unit.This company's current FIFO inventory consists of 200 units purchased at $16 per unit.Net realizable value has fallen to $13 per unit.Calculate the value of this company's inventory at the lower of cost or market.

The cost flow method chosen must match the actual physical flow of the goods.

The physical count of inventory is used to adjust the Inventory account balance to the actual inventory available.

During a period of steadily rising costs,the inventory valuation method that yields the highest reported net income is:

On January 31,a company needed to estimate its ending inventory to prepare its monthly financial statements.The following information is currently available: Inventory as of January 1: $120,500 Net sales for January: $400,000 Net purchases for January: $270,500 This company typically achieves a gross profit ratio of 15%.Ending Inventory under the gross profit method would be:

Goods that are in transit and were shipped FOB shipping point should be included in the inventory records of the ________.

Goods on consignment are goods that are shipped by the owner,called the ________,to another party called the ________ that will sell the goods for the owner.

Hull Company reported the following income statement information for the current year: The beginning inventory balance is correct.However,the ending inventory figure was overstated by $20,000.Given this information,the correct gross profit would be:

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system. -Determine the cost assigned to cost of goods sold using FIFO.

A company has the following per unit original costs and market values for its inventory.Lower of cost or market is applied to individual items. Part A: 50 units with a cost of $5,and replacement cost of $4.50 Part B: 75 units with a cost of $6,and replacement cost of $6.50 Part C: 160 units with a cost of $3,and replacement cost of $2.50 Under the lower of cost or market method,the total value of this company's ending inventory is:

A company made the following purchases during the year: On December 31,there were 28 units in ending inventory.These 28 units consisted of 2 from the January 10 purchase,3 from the March 15 purchase,4 from the April 25 purchase,11 from the July 30 purchase,and 8 from the October 10 purchase.Using specific identification,calculate the cost of the ending inventory.