Use the following information for Ephron Company to compute days' sales in inventory for Year 2. \[\begin{array} { | l | r | r | } \hline & \text { Year 2 } & \text { Year 1 } \\ \hline \text { Net sales } & \$ 547,500 & \$ 572,000 \\ \hline \text { Cost of goods sold } & 348,500 & 370,840 \\ \hline \text { Feding inventory } & 75,700 & 81,400 \\ \hline \end{array}\]

A) 50.5 B) 76.8 C) 82.3 D) 79.3 E) 52.4 A) 50.5 B) 76.8 C) 82.3 D) 79.3 E) 52.4 D

Eastview Company uses a periodic LIFO inventory system, and has the following purchases and sales: \[\begin{array} { | l | l | } \hline \text { January 1 } & 150 \text { units were purchased at \$9 per unit. } \\ \hline \text { January 17 } & 120 \text { units were sold } \\ \hline \text { January 20 } & 160 \text { units were purchased at \$11 per unit. } \\ \hline \text { January 29 } & 150 \text { units were sold } \\ \hline \end{array}\] -What is the value of ending inventory?

A) $2,670. B) $2,750. C) $360. D) $440. E) $2,730. A) $2,670. B) $2,750. C) $360. D) $440. E) $2,730.

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. \[\begin{array} { | r | l | c | l | } \hline \text { Date } & \text { Activities } & \text { Units Arquired at Cast } & \text { Units Sold at Retail } \\ \hline \text { May 1 } & \text { Beginning Inventory } & 150 \text { units @ } \$ 10.00 & \\ \hline 5 & \text { Purchase } & 220 \text { units @ } \$ 12.00 & \\ \hline 10 & \text { Sales } & & 140 \text { units @ } \$ 20.00 \\ \hline 15 & \text { Purchase } & 100 \text { units @ } \$ 13.00 & \\ \hline 24 & \text { Sales } & & 90 \text { units @ \$21.00 } \\ \hline \end{array}\]

A) $5,440 B) $2,850 C) $2,980 D) $2,460 E) $2,590 A) $5,440 B) $2,850 C) $2,980 D) $2,460 E) $2,590

A company had the following purchases and sales during its first month of operations: \[\begin{array} { | l | l | } \hline \text { January } 1 & \text { Purchased } 10 \text { units at } \$ 4.00 \text { per unit } \\ \hline \text { January } 9 & \text { Sold } 6 \text { units at } \$ 12.00 \text { per unit } \\ \hline \text { January } 17 & \text { Purchased 8 units at } \$ 5.50 \text { per unit } \\ \hline \text { January } 27 & \text { Sold } 7 \text { units at } \$ 12.00 \text { per unit } \\ \hline \end{array}\] 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.)

A) $23. B) $5. C) $27. D) $61. E) $84. A) $23. B) $5. C) $27. D) $61. E) $84.

Eastview Company uses a perpetual LIFO inventory system, and has the following purchases and sales: \[\begin{array} { | l | l | } \hline \text { January 1 } & 150 \text { units were purchased at \$9 per unit. } \\ \hline \text { January 17 } & 120 \text { units were sold } \\ \hline \text { January 20 } & 160 \text { units were purchased at \$11 per unit. } \\ \hline \text { January 29 } & 150 \text { units were sold } \\ \hline \end{array}\] -What is the value of ending inventory?

A) $2,670. B) $2,750. C) $380. D) $2,730. E) $440. A) $2,670. B) $2,750. C) $380. D) $2,730. E) $440.

Carolina Company uses the LIFO method for valuing its ending inventory. The following financial statement information is available for its first year of operation: $\begin{array}{c} \text {Carolina Company}\\ \text {Income Statement}\\ \text {For the year ended December 31}\\ \begin{array}{|l|r|} \hline \text { Sales } & \$ 60,000 \\ \hline \text { Cost of goods sold } & \underline{23,000} \\ \hline \text { Gross profit } & \$ 37,000 \\ \hline \text { Expenses } & \underline{13,000} \\ \hline \end{array}\end{array}$ \[\begin{array} { | l | r | } \hline \text { Expenses } & \underline { 13,000 } \\ \hline \text { Income before taxes } & \$ 24,000 \\ \hline \end{array}\] Carolina's ending inventory using the LIFO method was $8,700. Carolina's accountant determined that had the company used FIFO, the ending inventory would have been $9,100. a. Determine what the income before taxes would have been, had Carolina used the FIFO method of inventory valuation instead of LIFO. b. What would be the difference in income taxes between LIFO and FIFO, assuming a 30% tax rate? c. If Carolina wanted to lower the amount of income taxes to be paid, which method would it choose?

a. If ending inventory is $400 higher us

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using FIFO. $\begin{array}{|r|l|c|c|} \hline\text { Date } & \text { Activities } & \text { Units Acquired at Cost } & \text { Units Sold at Retail } \\ \hline \text { May 1 } & \text { Beginning Inventory } & 150 \text { units @ } \$ 10.00 & \\ \hline 5 & \text { Purchase } & 220 \text { units @ } \$ 12.00 & \\ \hline 10 & \text { Sales } & & 140 \text { units @ } \$ 20.00 \\ \hline 15 & \text { Purchase } & 100 \text { units@ } \$ 13.00 & \\ \hline 24 & \text { Sales } && 90 \text { units@ } \$ 21.00\\ \hline \end{array}$

A) $2,860 B) $2,590 C) $2,850 D) $2,460 E) $2,980 A) $2,860 B) $2,590 C) $2,850 D) $2,460 E) $2,980

Exam 6: Inventories and Cost of Sales

Use the following information for Ephron Company to compute days' sales in inventory for Year 2. Year 2 Year 1 Net sales \ 547,500 \ 572,000 Cost of goods sold 348,500 370,840 Feding inventory 75,700 81,400

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

D

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^whichBedrock was the consignor. • ^The^ending^inventory^balance^of^$412,000^included^$22,000^of^office^supplies^that^were^storedⁱⁿthe 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:

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Question 2

Correct Answer:

Verified

D

The ________ method of assigning costs to inventory and cost of goods sold requires that we divide the cost of goods available for sale by the units of inventory available at the time of each sale.

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(Short Answer)

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Question 3

Correct Answer:

Verified

weighted average (or average cost)

Eastview Company uses a periodic 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 -What is the value of ending inventory?

(Multiple Choice)

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Question 4

An advantage of the weighted average inventory method is that it tends to smooth out erratic changes in costs.

(True/False)

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Question 5

The company's inventory manager receives compensation that includes a bonus based on gross profit. You discover that the inventory manager has knowingly overstated ending inventory by $2 million. What effect does this error have on the financial statements of the company and specifically gross profit? Why would the manager knowingly overstate ending inventory? Would this be considered an ethics violation?

(Essay)

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Question 6

IFRS reporting currently does not allow which method of inventory costing?

(Multiple Choice)

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Question 7

Sandoval needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were damaged by flood and are not sellable. Another 2,000 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 4,000 units at a consignee's location. How many units should Sandoval include in its year-end inventory?

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Question 8

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

(True/False)

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Question 9

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. Date Activities Units Arquired at Cast Units Sold at Retail May 1 Beginning Inventory 150 units @ \ 10.00 5 Purchase 220 units @ \ 12.00 10 Sales 140 units @ \ 20.00 15 Purchase 100 units @ \ 13.00 24 Sales 90 units @ \2 1.00

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Question 10

Accounting principles require that inventory be reported at the market value (cost) of replacing inventory when cost is lower than market value.

(True/False)

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Question 11

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 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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Question 12

The inventory turnover ratio:

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Question 13

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

(True/False)

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Question 14

The ________ is a measure of how quickly a merchandiser sells its merchandise inventory.

(Short Answer)

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Question 15

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 -What is the value of ending inventory?

(Multiple Choice)

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Question 16

Carolina Company uses the LIFO method for valuing its ending inventory. The following financial statement information is available for its first year of operation: Carolina Company Income Statement For the year ended December 31 Sales \ 60,000 Cost of goods sold Gross profit \ 37,000 Expenses Expenses Income before taxes \ 24,000 Carolina's ending inventory using the LIFO method was $8,700. Carolina's accountant determined that had the company used FIFO, the ending inventory would have been $9,100. a. Determine what the income before taxes would have been, had Carolina used the FIFO method of inventory valuation instead of LIFO. b. What would be the difference in income taxes between LIFO and FIFO, assuming a 30% tax rate? c. If Carolina wanted to lower the amount of income taxes to be paid, which method would it choose?

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Question 17

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.

(Short Answer)

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Question 18

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using FIFO. Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 150 units @ \ 10.00 5 Purchase 220 units @ \ 12.00 10 Sales 140 units @ \ 20.00 15 Purchase 100 units@ \ 13.00 24 Sales 90 units@ \ 21.00

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Question 19

Identify and describe the four inventory valuation methods.

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Question 20

Use the following information for Ephron Company to compute days' sales in inventory for Year 2. Year 2 Year 1 Net sales \ 547,500 \ 572,000 Cost of goods sold 348,500 370,840 Feding inventory 75,700 81,400

The ________ method of assigning costs to inventory and cost of goods sold requires that we divide the cost of goods available for sale by the units of inventory available at the time of each sale.

An advantage of the weighted average inventory method is that it tends to smooth out erratic changes in costs.

IFRS reporting currently does not allow which method of inventory costing?

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

Accounting principles require that inventory be reported at the market value (cost) of replacing inventory when cost is lower than market value.

The inventory turnover ratio:

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

The ________ is a measure of how quickly a merchandiser sells its merchandise inventory.

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.

Identify and describe the four inventory valuation methods.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters

Exam 6: Inventories and Cost of Sales

Use the following information for Ephron Company to compute days' sales in inventory for Year 2. Year 2 Year 1 Net sales \ 547,500 \ 572,000 Cost of goods sold 348,500 370,840 Feding inventory 75,700 81,400

The ________ method of assigning costs to inventory and cost of goods sold requires that we divide the cost of goods available for sale by the units of inventory available at the time of each sale.

An advantage of the weighted average inventory method is that it tends to smooth out erratic changes in costs.

IFRS reporting currently does not allow which method of inventory costing?

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

Accounting principles require that inventory be reported at the market value (cost) of replacing inventory when cost is lower than market value.

The inventory turnover ratio:

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

The ________ is a measure of how quickly a merchandiser sells its merchandise inventory.

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.

Identify and describe the four inventory valuation methods.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters

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.