Readers.com uses a perpetual inventory system and has the following data for the month of February: If Readers.com uses the moving average method,how much is ending inventory on February 28? \[\begin{array} { r l r } \text { Feb. } 1 & \text { On hand, } 30 \text { units } @ \$ 5.00 \text { each } & \$ 150 \\ 8 & \text { Purchased 40 units } @ \$ 5.35 \text { each } & 214 \\ 15 & \text { Sold } 50 \text { units } & \\ 22 & \text { Purchased } 40 \text { units } @ \$ 5.20 \text { each } & 208 \\ 28 & \text { On hand, 60 units } & \end{array}\]

A) $300 B) $306 C) $312 D) $318 A) $300 B) $306 C) $312 D) $318

Takenson Corp. Takenson Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: \[\begin{array} { l r } \text { Sales } & \$ 500,000 \\ \text { Purchases } & 225,000 \\ \text { Inventory (beginning) } & 16,000 \\ \text { Inventory (ending) } & 30,000 \\ \text { Operating expenses } & 148,000 \\ \text { Income tax expense } & 10,000 \\ \text { Retained earnings (beginning) } & 53,000 \\ \text { Dividends } & 15,000 \end{array}\] -Refer to the information for Takenson Corp. Calculate the gross profit.

A) $241,000 B) $275,000 C) $289,000 D) $425,000 A) $241,000 B) $275,000 C) $289,000 D) $425,000

Dimension Lighting Corp.has the following data at its fiscal year-end: ?? ? \[\begin{array} { l r } \text { Net Sales } & \$ 27,250 \\ \text { Cost of Goods Sold } & 19,600 \\ \text { Gross Profit } & \$ 7,650 \end{array}\] Determine Dimension Lighting's gross profit ration. ?

A) 28.1% B) 39.0% C) 71.9% D) None of these choices A) 28.1% B) 39.0% C) 71.9% D) None of these choices

If a company overstates its ending inventory balance for 2018 by $10,000 and overstates its ending inventory balance for 2017 by $5,000,what are the effects on its net income for 2018 and 2017 if neither error is corrected? $\begin{array} { c c } \text { Effect on 2018 Net Income } & \text { Effect on 2017 Net Income } \\\end{array}$ a.$\begin{array} { c c } \text { Overstated by } \$ 15,000 & \text { Overstated by } \$ 10,000 \\\end{array}$ b. $\begin{array} { c c } \text { Understated by } \$ 5,000 & \text { Overstated by } \$ 10,000 \\\end{array}$ c. $\begin{array} { c c } \text {Overstated by } \$ 5,000 & \text { Overstated by } \$ 5,000 \\\end{array}$ d.$\begin{array} { c c } \text { Overstated by } \$ 10,000 & \text { Overstated by } \$ 5,000 \end{array}$

The answer of If a company overstates its ending inventory...

Takenson Corp. Takenson Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: \[\begin{array} { l r } \text { Sales } & \$ 500,000 \\ \text { Purchases } & 225,000 \\ \text { Inventory (beginning) } & 16,000 \\ \text { Inventory (ending) } & 30,000 \\ \text { Operating expenses } & 148,000 \\ \text { Income tax expense } & 10,000 \\ \text { Retained earnings (beginning) } & 53,000 \\ \text { Dividends } & 15,000 \end{array}\] -Refer to the information for Takenson Corp. ? Calculate the cost of goods sold

A) $275,000 B) $259,000 C) $241,000 D) $211,000 A) $275,000 B) $259,000 C) $241,000 D) $211,000

Exam 5: Inventories and Cost of Goods Sold

Readers.com uses a perpetual inventory system and has the following data for the month of February: If Readers.com uses the moving average method,how much is ending inventory on February 28? Feb. 1 On hand, 30 units @\ 5.00 each \ 150 8 Purchased 40 units @\ 5.35 each 214 15 Sold 50 units 22 Purchased 40 units @\ 5.20 each 208 28 On hand, 60 units

(Multiple Choice)

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Question 61

Assets are unexpired costs,and expenses are expired costs.

(True/False)

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Question 62

The understatement of ending inventory in one period leads to a(n)__________ of cost of goods sold expense in the same period.

(Short Answer)

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Question 63

When inventory is sold by a wholesaler or retailer,it is recorded in a different account on the income statement than a manufacturer would use.

(True/False)

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Question 64

During the current period,Mercado Corp.sold products to customers for a total of $76,000.Due to defective products,customers were given $2,800 in refunds for products that were returned and another $3,500 in reductions to their account balances.Discounts in the amount of $5,500 were given for early payment of account balances. Required Prepare the Net Sales section of Mercado's income statement.

(Essay)

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Question 65

Which of the following statements is true when using the indirect method of preparing the Operating Activities category of the statement of cash flows?

(Multiple Choice)

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Question 66

Cost of goods sold represents

(Multiple Choice)

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Question 67

Takenson Corp. Takenson Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Sales \ 500,000 Purchases 225,000 Inventory (beginning) 16,000 Inventory (ending) 30,000 Operating expenses 148,000 Income tax expense 10,000 Retained earnings (beginning) 53,000 Dividends 15,000 -Refer to the information for Takenson Corp. Calculate the gross profit.

(Multiple Choice)

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Question 68

The cost of Garmin Corp.'s inventory at the end of the year was $85,000;however,due to obsolescence,the cost to replace the inventory was only $65,000.What is the effect on the accounting equation of the adjustment needed to write down the inventory?

(Essay)

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Question 69

Dimension Lighting Corp.has the following data at its fiscal year-end: ?? ? Net Sales \ 27,250 Cost of Goods Sold 19,600 Gross Profit \ 7,650 Determine Dimension Lighting's gross profit ration. ?

(Multiple Choice)

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Question 70

If a company overstates its ending inventory balance for 2018 by $10,000 and overstates its ending inventory balance for 2017 by $5,000,what are the effects on its net income for 2018 and 2017 if neither error is corrected? Effect on 2018 Net Income Effect on 2017 Net Income a. Overstated by \ 15,000 Overstated by \ 10,000 b. Understated by \ 5,000 Overstated by \ 10,000 c. Overstated by \ 5,000 Overstated by \ 5,000 d. Overstated by \ 10,000 Overstated by \ 5,000

(Short Answer)

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Question 71

For each of the following,calculate the cost of inventory reported on the balance sheet. (a) The total merchandise inventory counted at the end of the year was $\$ 73,000$ . Purchases for $\$ 5,000$ are in transit under $\mathrm { FOB }$ shipping point terms. (b) The total merchandise inventory counted at the end of the year was $\$ 75,000$ . Purchases for $\$ 5,000$ are in transit under $\mathrm { FOB }$ destination point terms.

(Essay)

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Question 72

Under the __________ inventory system,the Inventory account is updated after each purchase or sale.

(Short Answer)

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Question 73

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

(True/False)

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Question 74

Cost of goods sold is the difference between cost of goods sold available for sale and beginning inventory.

(True/False)

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Question 75

Takenson Corp. Takenson Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Sales \ 500,000 Purchases 225,000 Inventory (beginning) 16,000 Inventory (ending) 30,000 Operating expenses 148,000 Income tax expense 10,000 Retained earnings (beginning) 53,000 Dividends 15,000 -Refer to the information for Takenson Corp. ? Calculate the cost of goods sold

(Multiple Choice)

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Question 76

FIFO results in the least amount of income before taxes,assuming a period of rising prices.

(True/False)

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Question 77

The LIFO conformity rule requires that if a company uses LIFO in reporting income to stockholders,it also must use LIFO on its tax return.

(True/False)

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Question 78

Which of the following statements is true?

(Multiple Choice)

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Question 79

For which type of inventory would a company most likely use the specific identification method?

(Multiple Choice)

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Question 80

Assets are unexpired costs,and expenses are expired costs.

The understatement of ending inventory in one period leads to a(n)__________ of cost of goods sold expense in the same period.

When inventory is sold by a wholesaler or retailer,it is recorded in a different account on the income statement than a manufacturer would use.

Which of the following statements is true when using the indirect method of preparing the Operating Activities category of the statement of cash flows?

Cost of goods sold represents

The cost of Garmin Corp.'s inventory at the end of the year was $85,000;however,due to obsolescence,the cost to replace the inventory was only $65,000.What is the effect on the accounting equation of the adjustment needed to write down the inventory?

Dimension Lighting Corp.has the following data at its fiscal year-end: ?? ? Net Sales \ 27,250 Cost of Goods Sold 19,600 Gross Profit \ 7,650 Determine Dimension Lighting's gross profit ration. ?

Under the __________ inventory system,the Inventory account is updated after each purchase or sale.

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

Cost of goods sold is the difference between cost of goods sold available for sale and beginning inventory.

FIFO results in the least amount of income before taxes,assuming a period of rising prices.

The LIFO conformity rule requires that if a company uses LIFO in reporting income to stockholders,it also must use LIFO on its tax return.

Which of the following statements is true?

For which type of inventory would a company most likely use the specific identification method?

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