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

In periods of falling prices,FIFO will result in a higher ending inventory valuation than the average cost formula.

Jaywall Corporation,which uses a perpetual inventory system,recorded the following inventory transactions during 2012. (a)Using the FIFO cost formula,calculate the amount of the cost of goods sold for the quarter ended June 30.(Show calculations) (b)Using the average cost formula,calculate the amount of ending inventory at June 30.(Show calculations)

Davis Company uses the perpetual inventory system and the FIFO inventory costing method.All purchases and sales were cash transactions.The records reflected the following for January,20B Determine the following

Under the perpetual inventory system,cost of goods sold can be determined before a physical inventory count is completed.

In 20A,C Co.had an inventory turnover ratio of 6.11 while P Co.had a ratio of 10.67.Which of the following might most accurately explain the difference in their ratios?

David Company uses the gross method to record its credit purchases,and it uses the periodic inventory system.On July 21,20D,the company purchased goods that had an invoice price of $3,000 with terms of 3/10,n/30.If payment in full is made on July 30,the journal entries to record the purchase and payment should be which of the following?

An overstatement error in the 20B beginning inventory would cause an overstatement of the 20B profit.

In 20B,Landings Inc.provided the following information in their financial statements: Cost of goods sold under FIFO costing is $22.2 billion and their inventory value under FIFO is $1.3 billion at the end of 20B and $1.2 billion at the end of 20A.What would their inventory turnover ratio be under the FIFO cost flow method?

Inventory turnover is computed as cost of goods sold divided by average inventory.

When a company uses the periodic inventory system in accounting for its merchandise inventory,which of the following is true?

Joe Company sold merchandise with an invoice price of $1,000 to Gibbs,Inc.,with terms of 2/10,n/30.Which of the following is the correct entry to record the purchase by Gibbs if the company uses the periodic inventory system and the gross method to record purchases?

On March 10,Frazier Company received merchandise for resale from its normal supplier.The invoice price was $3,600 with terms of 2/10,n/30 for 100 units of Part #345.The invoice was paid on March 17.Freight costs were $120 and the company paid $108 of interest on a loan to buy the inventory.What is the unit cost that should be recorded for each of the 100 units of Part #345?

In conformity with the matching process,the total cost of sales during the period must be related to the sales revenue earned during the period.

An overstatement of the ending inventory causes an overstatement of current assets and profit,as well as an overstatement of cost of goods sold for the same year.

A high inventory turnover ratio indicates that minimal funds are tied up in inventory.

At the end of 20B,SAS Company failed to include some goods in its ending inventory and failed to record the purchase of these goods.For 20B,these two errors caused which of the following?

Assume World Company buys compact disks at a unit cost of $10 and sells them at a unit price of $13.There was no beginning inventory. Provide the journal entries required below by entering the account code of the appropriate account and the amount for each debit and credit:

Which of the following is true under the perpetual inventory system?

Miller 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 350 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.Determine the difference in the amount of profit that the company would have reported if it had used FIFO instead of average cost.Would profit have been greater or less?

The LCNRV adjustment decreases cost of sales,decreases profit,and decreases reported inventory.