Exam 6: Inventories

When applying the retail method,which of the following would not be a component of the cost-to-retail percentage?

Inventory turnover is expressed in terms of

Days' inventory on hand equals 365 divided by

Why are cost flow assumptions made when accounting for merchandise inventory?

Use this inventory information for the month of March to answer the following question. Mar. 1 Beginning inventory 20 units @ \ 70 7 Purchase 70 units @ \ 80 18 Sale 25 units 22 Purchase 10 units @ \ 88 29 Sale 40 units Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?

Costs incurred in storing inventory usually are included in inventory costs.

During April,Leary Company sold 900 units of Product Q.Its beginning inventory and purchases during the month were as follows: Apr. 1 Beginning inventory 200 units @ \ 1 5 Purchases 200 units @ \ 2 10 Purchases 200 units @ \3 15 Purchases 200 units @ \ 4 20 Purchases 200 units @ \5 25 Purchases 200 units @ \6 Compute the cost of the ending inventory under each of three methods: (a)average-cost,(b)LIFO,and (c)FIFO.Assume the periodic inventory system is used.(Show your work.)

A company has goods available for sale of $250,000 at retail and $175,000 at cost.It also had sales of $210,000 for the period.What is the estimated cost of ending inventory,using the retail method?

Use this inventory information for the month of June to answer the following question. June 1 Beginning inventory 10 units @ \1 20 5 Purchase 60 units @\ 112 14 Sale 40 units 21 Purchase 30 units @ \ 116 30 Sale 28 units Assuming that a periodic inventory system is used,what is cost of goods sold on a LIFO basis?

Both the retail method and the gross profit method are useful in estimating the inventory cost.

A merchandiser's inventory consists of raw materials,work in process,and finished goods.

The LIFO method tends to smooth out the peaks and valleys of a business cycle.

In a period of declining prices,which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

Emil Hinkel owns and operates a large antique shop.He uses the specific identification method to account for transactions that affect inventory.Hinkel recently completed a physical inventory of the merchandise in his shop as part of his year-end work.Today,his accountant called to inform him that it would be necessary to adjust the inventory figure shown on the balance sheet,which will increase Hinkel's tax liability.Hinkel argued that the inventory had to be correct,because he counted it twice and matched every item to an invoice.Cite reasons why the accountant would find it necessary to adjust the inventory even if Hinkel's count is accurate.

Winer & Daughters reports income before income taxes of $10,000 during 2010.If beginning inventory was understated by $3,000 and ending inventory was overstated by $1,200,calculate corrected income before income taxes for the year.(Show your work.)

Freight charges associated with the purchase of inventory normally are not included in inventory cost.