Exam 5: Inventories and Cost of Sales

A company's current LIFO inventory consists of 5,000 units purchased at $6 per unit.Replacement cost has now fallen to $5 per unit.What is the entry the company must record to adjust inventory to market?

On September 1 of the current year,Scots Company experienced a flood that destroyed the company's entire inventory.Because the company had not completed its month end reporting for August,it must estimate the amount of inventory lost using the gross profit method.At the beginning of August,the company reported beginning inventory of $215,450.Inventory purchased during August was $192,530.Sales for the month of August were $542,500.Assuming the company's typical gross profit ratio is 40%,estimate the amount of inventory destroyed in the flood.

What specific costs and deductions are used to determine the final cost of merchandise inventory? Identify all costs including the incidental costs.

If obsolete or damaged goods can be sold,they will be included in inventory at their original cost.

Jefferson Company has sales of $300,000 and cost of goods available for sale of $270,000.If the gross profit ratio is typically 30%,the estimated cost of the ending inventory under the gross profit method would be:

A company's cost of inventory was $219,500.Due to phenomenal demand the market value of its inventory increased to $221,700.This company should record the inventory at its market value.

The reasoning behind the retail inventory method is that if we can get a good estimate of the cost-to-retail ratio,we can multiply ending inventory at retail by this ratio to estimate ending inventory at cost.

An understatement of ending inventory will cause:

A company had the following purchases and sales during its first month of operations: Using the Periodic weighted average method,what is the value of cost of goods sold? (Round weighted average cost per unit to 2 decimal places,and final answer to the nearest whole dollar.)

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory. -Using the periodic FIFO inventory costing method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)

Bedrock Company reported a December 31 ending inventory balance of $412,000.The following additional information is also available: -The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Bedrock was the consignor. -The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. Based on this information,the correct balance for ending inventory on December 31 is:

Incidental costs for acquiring merchandise inventory,such as import duties,freight,storage,and insurance,should not be added to the cost of inventory.

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.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the LIFO perpetual inventory method, -What amount will be reported in cost of goods sold for the 11 units that were sold?

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

An overstated beginning inventory will ________ cost of goods sold and ________ net income.

Understating ending inventory understates both current and total assets.

The simple rule for inventory turnover is that a low ratio is preferable.

Costs included in the Merchandise Inventory account can include all of the following except: