Exam 7: Inventories: Cost Measurement and Flow Assumptions

A manufacturing company uses three inventory accounts. What are the accounts? Provide a brief description of the costs that accumulate in each account.

The cost of goods sold can be determined only after a physical count of inventory on hand under the

Taylor Company changed its inventory cost flow assumption from FIFO to LIFO in a period of rising prices. What was the result of the change on ending inventory in the year of the change?

Typically, the impact of the LIFO reserve is to

Which of the following is not an advantage of a perpetual inventory system?

If a company uses LIFO for annual reporting purposes, it must also use it for interim reporting. This enables external users to accurately compare financial statements.

At December 31, 2014, Jefferson, Inc. had inventory on hand amounting to $270,000. The following items were not included in this inventory: • Goods sold and still in transit, shipped Dec. 29 FOB destination, sales price $12,000, freight costs $500. • Goods held by Johnson on consignment from Miller Company, sales price $12,500, shipping costs $300. • Goods returned by customers and held pending inspection, cost $1,100. • On Jan. 1, 2015, a monthly freight bill for $1,600 was received. The bill specifically related to merchandise purchased in December 2014, 40 percent of which was sold in December. No related adjustment had yet been made. Jefferson sells at a gross profit of 25% on cost. Required: Compute the cost of ending inventory to be reported on Jefferson's December 31, 2014, balance sheet.

On June 1, Sabrex Electric bought $7,500 of goods with terms of 3/15, n/45. Required: Fill in the blanks below with dollar amounts, if any are appropriate. (Use the net method for items a. and b. below.) a.If payment was made on June 15, you would debit Accounts Payable for $________. b.If payment was made on July 3, you would debit Purchases Discounts Lost for $________. (Use the gross price method for c. and d. below.) c.If payment is made on June 15, you would credit Cash for $________. d.Assuming no payment had yet been made, you would debit Purchase Discounts Lost for $________ in the adjusting entry at July 31 (fiscal year-end).

The information below is provided for Sea Company: Required : a.Compute Sea Company’s 2016 ending inventory using dollar-value LIFO. b.Explain why a company would want to use dollar-value LIFO.

Morton uses the moving average flow assumption. On January 1, there were 180 units on hand and the total inventory cost was $900. On January 10, 40 more units were purchased at a cost of $6 per unit. Sales included 20 units on January 3 and 60 units on January 17. What was the total cost of goods sold recorded for the units sold on January 17?

Rubric, Inc. provided the following inventory transaction summary for May: In addition, it has been determined that Rubric's inventory at the beginning of the month was $400.00 (200 units). What was Rubric's cost per unit at the end of May, using the moving average method?

What is the difference between FOB shipping point and FOB destination? Why is this important?

What three difficulties does dollar-value LIFO overcome compared to applying simple LIFO?

The LIFO conformity rule allows a company to use FIFO for financial reporting and LIFO for income taxes.

A manufacturing company typically has how many inventory accounts?

On August 1, Micro Encoders, Inc. had 120 units of a certain software package that cost $6 per unit. During May, the following purchases were made: During August, 300 units were sold. If Micro Encoders uses the weighted average method, the cost of ending inventory would be

Exhibit 7-5 Sullivan Produce Co. switched from FIFO to LIFO on January 1, 2013, for external reporting and income tax purposes, while retaining FIFO for internal reports. On that date, the FIFO inventory equaled $360,000. The ensuing three-year period resulted in the following: -Refer to Exhibit 7-5. The ending inventory at December 31, 2014, using the dollar-value LIFO method would be

Morris Corp. uses dollar-value LIFO. Certain information follows: Compute the ending 2016 inventory.

Goods in transit shipped FOB shipping point should be included in the inventory of the

In a period of rising prices LIFO produces the highest cost of goods sold and the lowest gross profit.