Exam 8: Reporting and Interpreting Property, plant, and Equipment; Intangibles; and Natural Resources

Retail Company reported the following amounts on its 20B income statement: Purchases,$45,000; Beginning 20B inventory,$15,000; and Cost of goods sold,$50,000.What was the 20B ending inventory?

Libby Company uses the periodic inventory system and applied FIFO inventory costing.At the end of the annual accounting period,December 31,20D,the accounting records for the best selling item in inventory showed: Determine the following (show computations and round to the nearest dollar):

Which of the following types of inventory usually is not held by a manufacturing business?

In a period of falling prices,FIFO normally results in a higher profit than does weighted-average cost.

On March 15,20A,Jack Company purchased $5,000 of merchandise on credit subject to terms 2/10,n/20.Jack records its purchases using the gross amount.The periodic inventory system is used.If Jack pays for these goods on March 30,the entry made to record the payment should include which of the following?

The following income statement is complete except for a few captions with solid lines on the left,and amounts with dotted lines on the right.You are to fill in the most likely captions and amounts:

Reducing inventory can free up cash and allow for reduced borrowing.

Which of the following businesses would not have cost of goods sold?

When goods are sold on credit,revenue usually should be recognized at the date of which of the following?

Taste Best Company uses the periodic inventory system.It has compiled the following information in order to prepare the financial statements at the end of 20B:

In 20B,Landings,Inc.provided the following items in their footnotes.Their cost of goods available for sale was $4.5 billion under FIFO costing and their ending inventory value under FIFO costing was $2.1 billion.Their purchases were $4.1 billion.What was their opening inventory?

A company that increases inventory by $.5 billion while trade payables increases by $.7 billion will cause an increase in cash flow from operations of $.2 billion.

Which of the following is true?

A company recorded net purchases of $20.3 billion for 20B.In 20A,ending tradepayables was $1.2 billion and in 20B,it was $1.6 billion.How much cash was paid to suppliers in 20B?

A company cannot use an inventory costing method if the method does not reflect the actual physical flow of goods on and off the shelves.

For each independent situation given below,determine the effect on pretax profit for each.Enter "+" to indicate pretax profit is overstated,"-" to indicate pretax profit is understated,or "NA" to indicate that pretax profit is not affected.

House Depot Company hired a new store manager in March 20C,who determined the ending inventory on December 31,20C,to be $20,000.In March,20E the company discovered that the 20C ending inventory should have been $28,000.The December 31,20D,inventory was correct.Ignore income taxes. Complete the following table to show the effects of the inventory error on the four amounts listed.Give the amount of the discrepancy and indicate whether it was overstated (O),understated (U),or had no effect (N).

The following information was taken from the 20B income statement of Milburn Company: Pretax profit,$12,000; Total operating expenses,$20,000; Sales revenue,$120,000.Compute the cost of goods sold.

The 20B records of Tom Company showed beginning inventory,$6,000; cost of goods sold,$14,000; and ending inventory,$8,000.What was the purchases amount for 20B?

Analysts and creditors watch the inventory turnover ratio because a sudden decline in this ratio may mean that a company is facing an unexpected decline in demand for its products or is becoming sloppy in its production management.