Exam 8: Inventories: Measurement

The Foxworthy Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product.Beginning inventory of 40,000 units consisted of the following,listed in chronological order of acquisition: During 2016,inventory quantity declined by 18,000 units.All units purchased during 2016 cost $8.00 per unit. Required: Calculate the before-tax LIFO liquidation profit or loss that the company would report in a disclosure note assuming the amount determined is material.

It is the end of the accounting period,and your boss asks you to help determine the inventory balance to place in the company's balance sheet.Explain which physical quantities of inventory that you will include and which you will exclude.

Linguini Inc.adopted dollar-value LIFO (DVL)as of January 1,2016,when it had an inventory of $800,000.Its inventory as of December 31,2016,was $811,200 at year-end costs and the cost index was 1.04.What was DVL inventory on December 31,2016?

The choice of cost flow assumption (FIFO,LIFO,or average)does not depend on the actual physical flow of the product.

FIFO periodic and FIFO perpetual always produce the same dollar amounts for cost of goods sold.

Ending inventory assuming LIFO in a periodic inventory system would be:

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2016. Missing information has been left blank. -Required: Compute the missing amounts.

Cost of goods sold is given by:

Required: Compute the January 31 ending inventory and cost of goods sold for January,assuming Random Creations uses average cost and a periodic inventory system.

The average days inventory for ATC (rounded)for 2016 is:

Buckeye Corporation adopted dollar-value LIFO on January 1,2016,when the inventory value was $500,000 and the cost index was 1.0.On December 31,2016,the inventory value at year-end costs was $535,000 and the cost index was 1.06.Buckeye would report a LIFO inventory of:

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2016. Missing information has been left blank. -Required: Compute the missing amounts.

Required: Compute the January 31 ending inventory and cost of goods sold for January,assuming Random Creations uses FIFO.

Briefly describe why companies that use perpetual inventory systems must still perform physical inventories.

What is cost of goods available for sale,assuming CBC uses the gross method?

Inventory does not include:

Suppose that Badger's 2017 ending inventory,valued at year-end costs,was $143,000 and that the relative cost index for this inventory in 2017 was 1.10.In determining the inventory balance should Badger report in its 12/31/17 balance sheet:

The primary reason for the popularity of LIFO is that it:

Unit LIFO is more costly to implement than dollar-value LIFO.

Required: Compute the January 31 ending inventory and cost of goods sold for January,assuming Denver uses FIFO.