Exam 5: Inventories and Cost of Sales
Exam 1: Accounting in Business331 Questions
Exam 2: Analyzing for Business Transactions293 Questions
Exam 3: Adjusting Accounts for Financial Statements445 Questions
Exam 4: Accounting for Merchandising Operations267 Questions
Exam 5: Inventories and Cost of Sales258 Questions
Exam 6: Cash, fraud, and Internal Controls230 Questions
Exam 7: Accounting for Receivables237 Questions
Exam 8: Accounting for Long-Term Assets283 Questions
Exam 9: Accounting for Current Liabilities258 Questions
Exam 10: Accounting for Long-Term Liabilities250 Questions
Exam 11: Corporate Reporting and Analysis247 Questions
Exam 12: Reporting Cash Flows265 Questions
Exam 13: Analysis of Financial Statements263 Questions
Exam 14: Time Value of Money84 Questions
Exam 15: Investments228 Questions
Exam 16: Partnership Accounting189 Questions
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The simple rule for inventory turnover is that a low ratio is preferable.
(True/False)
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Eastview Company uses a perpetual LIFO inventory system,and has the following purchases and sales:
January 1 150 units were purchased at \9 per unit. January 17 120 units were sold. January 20 160 units were purchased at \1 1 per unit. January 29 150 units were sold.
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What is the value of cost of goods sold?
(Multiple Choice)
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Net realizable value for damaged or obsolete goods is sales price less the cost of making the sale.
(True/False)
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A company sells garden hoses and uses the perpetual inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during September were as follows:
September 1: Beginning balance of 18 units at $13 each
September 12: Purchased 30 units at $14 each
September 19: Sold 24 units at $30 selling price each
September 20: Purchased 24 units at $17 each
September 27: Sold 27 units at $30 selling price each
If the ending inventory is reported at $276,what inventory method was used?
(Multiple Choice)
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Monarch Company uses a weighted-average perpetual inventory system,and has the following purchases and sales:
January 1 20 units were purchased at \ 10 per unit. January 12 12 units were sold. January 20 18 units were purchased at \ 11 per unit.
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What is the value of ending inventory? (Round average cost per unit to 2 decimal places,and final answer to the nearest dollar.)
(Multiple Choice)
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A company's warehouse contents were destroyed by a flood on September 12.The following information was the only information that was salvaged:
1.Inventory,beginning: $28,000
2.Purchases for the period: $17,000
3.Sales for the period: $55,000
4.Sales returns for the period: $700
The company's average gross profit ratio is 35%.What is the estimated cost of the lost inventory?
(Multiple Choice)
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Incidental costs for acquiring merchandise inventory,such as import duties,freight,storage,and insurance,should not be added to the cost of inventory.
(True/False)
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A company had the following ending inventory costs:
Product Units of Hand Unit Cost Market Value A 10 \ 5 \6 B 50 8 7 C 35 10 11
Required:
Calculate the lower of cost or market (LCM)value for each individual item.
(Essay)
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Match the inventory valuation method from the list below that is being described in each situation in letters a-e.In all cases,assume a period of rising prices.
Correct Answer:
Premises:
Responses:
(Matching)
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A company uses the retail inventory method and has the following information available concerning its most recent accounting period:
At Cost At Retail January 1 beginning inventory \ 167,340 \ 304,240 Cost of goods purchased 561,850 1,021,560 Sales 940,400 Sales returns 40,200
1.Use the retail inventory method to estimate the company's year-end inventory at cost.
2.A year-end physical count at retail prices yields a total inventory of $404,800.Prepare a calculation showing the company's loss from shrinkage at cost and at retail.
(Essay)
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Match the following terms with the appropriate definition.
-An owner of goods who ships them to another party who will then sell the goods for the owner.
(Multiple Choice)
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What advantages does a perpetual inventory system have over periodic inventory system?
(Essay)
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A company had the following purchases and sales during its first month of operations:
January 1 Purchased 10 units at \ 4.00 per unit January 9 Sold 6 units at \ 12.00 per unit January 17 Purchased 8 units at \ 5.50 per unit January 27 Sold 7 units at \ 12.00 per unit
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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.)
(Multiple Choice)
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Underwood had cost of goods sold of $8 million and its ending inventory was $2 million.Therefore,its days' sales in inventory equals 25 days.
(True/False)
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________ is the estimated sales price of damaged goods minus the cost of making the sale.
(Short Answer)
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Avanti purchases inventory from overseas and incurs the following costs: the merchandise cost is $50,000,credit terms 2/10,n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000.Avanti paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions.Compute the cost that should be assigned to the inventory.
(Multiple Choice)
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In applying the lower of cost or market method to inventory valuation,market is defined as the current selling price.
(True/False)
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Hull Company reported the following income statement information for the current year:
Sales \ 410,000 Cost of goods sold: Beginning inventory \ 132,000 Cost of goods purchased Cost of goods available for sale 405,000 Ending inventory 144,000 Cost of goods sold Gross profit \ 149,000
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:
(Multiple Choice)
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The cost of an inventory item includes the ________,plus ________ costs necessary to put it in a place and condition for sale.
(Short Answer)
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