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

During the audit of Virginia Company's 20B financial statements,the auditors discovered that the 20A ending inventory had been overstated by $10,000 and that the 20B ending inventory had been overstated by $8,000.Before the effect of these errors,20B pretax profit had been computed as $100,000.What should be reported as the correct 20B profit before taxes?

Compute the missing amounts for the income statement for each independent case.

The qualitative characteristic,reliability,is the primary consideration to a business considering changing its inventory costing method.

An error in the measurement of ending inventory affects the cost of sales on the current period's income statement and ending inventory on the statement of financial position.

An overstatement of the beginning inventory results in

If merchandise for resale is purchased for $2,000,terms 2/10,n/30,the entry to record the purchase should be which of the following (assuming a periodic inventory system and the gross method)?

Seinerfeld Company had its merchandise inventory warehouse destroyed by a fire.Thankfully,the owner had the accounting records at home to prepare financial statements after counting the inventory earlier in the day.The company used the periodic inventory system.In the shock of being notified of the fire,the owner spilled his dinner on the income statement he had just completed.However,the following information was readable: Sales,$200,000; Beginning Inventory,$20,000; Purchases,$130,000; Total Operating Expenses (not including taxes),$40,000; and Profit Before Taxes,$20,000.There were no sales returns,purchases returns,sales discounts nor purchases discounts.Compute the amount of the ending inventory on hand before the fire.

Inventory is a tangible asset purchased for use in the company's operations.

An aircraft company would most likely have a

The following information was taken from the 20B income statement of Milburn Company: Pretax profit,$12,000; Total operating expenses (not including income taxes),$20,000; Sales revenue,$120,000; Beginning inventory,$8,000; and Purchases,$90,000.Compute the amount of the ending inventory.

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

A problem with the specific identification method is that

The appearance of a purchases account in a trial balance usually indicates that the company is using a periodic inventory system.

Ending inventory should be measured based on the lower of actual cost or net realizable value.

"Toys 4 U" had cost of goods sold in 2012 of $8,191 million and $7,710 million in 2011.Their merchandise inventory in 2012 was $1,902 million and $2,464 million in 2011.How long was "Toys 4 U" average days to sell their inventory in 20112?

In a period of rising prices,which of the following inventory cost formulas generally results in the lowest profit figure?

The Wilburn Company's income statement for 20B reported the following: Cost of goods sold,$75,000; beginning inventory,$12,000; and ending inventory,$15,000.The amount of purchases during 20B was what amount? $_____________________________ (Show computations).

Walker Corporation uses the periodic inventory method and had the following inventory information available: A physical count of inventory on December 31 revealed that there were 50 units on hand. Requirements: Answer the following independent questions and show calculations supporting your answers. 1.Assume that the company uses FIFO.The value of the ending inventory at December 31 is $__________. 2.Assume that the company uses average cost.The value of the ending inventory on December 31 is $__________. 3.Assume that the company uses average cost.The value of cost of goods sold on December 31 is $__________. 4.Assume that the company uses FIFO.The value of the cost of goods sold on December 31 is $__________.

Dittner Inc.opened for business on July 1,2012 selling unique jewellery purchased from local artisans.During the month the company made the following purchases: On July 31,only inventory items 006,008,and 010 remained in inventory. Requirements: (a)Determine the cost of goods sold for Harris Inc.for the month of July using the specific identification cost determination method. (b)Discuss whether or not specific identification is an appropriate cost determination method for this company.

Richmond Company had the following information taken from its 20A adjusted trial balance: Sales,$200,000; Sales Discounts,$4,000; Beginning Inventory,$10,000; and Purchases,$140,000.A physical count of the merchandise on hand at the end of the year showed $20,000.Compute the gross margin (gross profit)that would appear in the income statement.