Question 1

What is the cost of goods sold model for a merchandiser? What is the cost of goods sold model for a manufacturer?

Accepted Answer

Merchandiser: @#IMG-DLM&_TB620

Question 2

On June 1, Dollar Hardware, Inc. had an inventory of 300 gas grills costing $100 each. Purchases and sales during June are as follows: 
  
What is the cost of Dollar's inventory on June 30 using the FIFO method?

Accepted Answer

A)  $15,000 
B)  $16,000 
C)  $16,500 
D)  $18,000 
A)  $15,000 
B)  $16,000 
C)  $16,500 
D)  $18,000

Question 3

Silver Quick adopted LIFO in January 1, 2015, when the inventory had a FIFO cost of $180,000 ($10 per unit). At the end of 2015, inventory consisted of 18,750 units at $12 per unit, and the ending inventory for 2016 consisted of 20,000 units at $15 per unit.
Required: 
a.Calculate the cost index to be used for 2015 and 2016 using the link-chain method.
b.Compute the ending inventory for 2015 and 2016 using dollar-value LIFO.

Accepted Answer

The answer of Silver Quick adopted LIFO in January 1,...

Question 4

Exhibit 7-3 Davis Co. had the following inventory activity during April:   
-Refer to Exhibit 7-3. Assuming Davis uses a periodic FIFO cost flow assumption, ending inventory at April 30 would be

Accepted Answer

A)  $880 
B)  $920 
C)  $1,090 
D)  $1,890 
A)  $880 
B)  $920 
C)  $1,090 
D)  $1,890

Question 5

A retail firm would normally use an inventory account titled

Accepted Answer

A)  finished goods inventory 
B)  merchandise inventory 
C)  goods in process inventory 
D)  raw materials inventory 
A)  finished goods inventory 
B)  merchandise inventory 
C)  goods in process inventory 
D)  raw materials inventory

Question 6

.......

Accepted Answer

The answer of ..........

Question 7

Exhibit 7-4 RJ, Inc. had the following activity for an inventory item during June:   
-Refer to Exhibit 7-4. Assuming RJ, Inc. uses a periodic weighted average cost flow assumption, ending inventory for June would be

Accepted Answer

A)  $512 
B)  $560 
C)  $768 
D)  $720 
A)  $512 
B)  $560 
C)  $768 
D)  $720

Question 8

For goods sold FOB shipping point, ownership of the inventory is passed when the

Accepted Answer

A)  inventory arrives at the destination 
B)  purchase order for the inventory is complete 
C)  inventory is shipped to the buyer 
D)  inventory sold is segregated from the seller's other inventory 
A)  inventory arrives at the destination 
B)  purchase order for the inventory is complete 
C)  inventory is shipped to the buyer 
D)  inventory sold is segregated from the seller's other inventory

Question 9

A company's liquidation of inventory under LIFO results in higher income during periods of rising costs. Management can manipulate earnings by delaying purchases until after the end of the fiscal year.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 7-3 Davis Co. had the following inventory activity during April:   
-Refer to Exhibit 7-3. Assuming Davis uses a perpetual LIFO cost flow assumption, ending inventory at April 30 would be

Accepted Answer

A)  $880 
B)  $920 
C)  $1,090 
D)  $1,890 
A)  $880 
B)  $920 
C)  $1,090 
D)  $1,890

Question 11

On October 17, Conrad Beauty Supplies bought $42,000 of goods with terms of 1/10, n/30. One half of the bill was paid on October 24, and the rest of the bill was paid on October 31.
Required:
Prepare journal entries for October 24 using the:

Accepted Answer

(1)gross p

Question 12

The following data has been provided by Lee Company regarding its inventory purchases and sales throughout the year.   Required:
Compute the cost of goods sold and ending inventory using the perpetual inventory system for the FIFO cost flow assumption.

Accepted Answer

Ending inventory is

Question 13

Exhibit 7-1 Edwards Co. purchased raw materials with a cost of $95,000 on March 2, 2014. Credit terms of 3/20, n/60 applied. If Edwards pays for the purchase on March 18, 2014, calculate the amount recorded for inventory on March 2, 2014, using the method given.
-Refer to Exhibit 7-1. Edwards uses a perpetual inventory system and the gross price method.

Accepted Answer

A)  $42,000 
B)  $76,000 
C)  $92,150 
D)  $95,000 
A)  $42,000 
B)  $76,000 
C)  $92,150 
D)  $95,000

Question 14

A perpetual inventory system

Accepted Answer

A)  only knows the inventory on hand at the end of the year physical count 
B)  keeps a continuous record of the physical quantities in its inventory 
C)  does not maintain a continuous record of the physical quantities of inventory on hand 
D)  does not maintain a continuous record of the cost of inventory on hand 
A)  only knows the inventory on hand at the end of the year physical count 
B)  keeps a continuous record of the physical quantities in its inventory 
C)  does not maintain a continuous record of the physical quantities of inventory on hand 
D)  does not maintain a continuous record of the cost of inventory on hand

Question 15

The SEC requires a company that uses LIFO to disclose the amount of the differentiation between LIFO and FIFO.

Accepted Answer

A) True 
 B)False

Question 16

Even though the LIFO cost flow assumption will reduce taxable income and the related cash outflow for income taxes, there are certain difficulties encountered with its implementation. Thus, dollar-value LIFO is often used.
Required:
Discuss three different ways that the dollar-value LIFO method overcomes some of the difficulties in the application of the LIFO approach.

Accepted Answer

Three difficulties involved in the appli

Question 17

Which one of the following statements is true?

Accepted Answer

A)  FOB destination means the buyer has legal title to the goods while they are in transit. 
B)  FOB shipping point means the seller has legal title to the goods while they are in transit. 
C)  FOB destination means the seller has legal title to the goods until they reach the buyer's place of business. 
D)  FOB shipping point means the buyer acquires legal title to the goods when they reach the buyer's place of business. 
A)  FOB destination means the buyer has legal title to the goods while they are in transit. 
B)  FOB shipping point means the seller has legal title to the goods while they are in transit. 
C)  FOB destination means the seller has legal title to the goods until they reach the buyer's place of business. 
D)  FOB shipping point means the buyer acquires legal title to the goods when they reach the buyer's place of business.

Question 18

One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers.
Required:

Accepted Answer

@#IMG-DLM&_TB6205_00

Question 19

When shipping FOB shipping point the seller still retains economic control until the goods are received by the buyer, therefore they should not be recorded into inventory by the buyer until receipt.

Accepted Answer

A) True 
 B)False

Question 20

In interim reporting, a LIFO liquidation requires the company to forecast the year-end

Accepted Answer

A)  cost of goods sold 
B)  ending inventory 
C)  LIFO reserve 
D)  tax liability 
A)  cost of goods sold 
B)  ending inventory 
C)  LIFO reserve 
D)  tax liability

What is the cost of goods sold model for a merchandiser? What is the cost of goods sold model for a manufacturer?

On June 1, Dollar Hardware, Inc. had an inventory of 300 gas grills costing $100 each. Purchases and sales during June are as follows: What is the cost of Dollar's inventory on June 30 using the FIFO method?

Exhibit 7-3 Davis Co. had the following inventory activity during April: -Refer to Exhibit 7-3. Assuming Davis uses a periodic FIFO cost flow assumption, ending inventory at April 30 would be

A retail firm would normally use an inventory account titled

.......

Exhibit 7-4 RJ, Inc. had the following activity for an inventory item during June: -Refer to Exhibit 7-4. Assuming RJ, Inc. uses a periodic weighted average cost flow assumption, ending inventory for June would be

For goods sold FOB shipping point, ownership of the inventory is passed when the

A company's liquidation of inventory under LIFO results in higher income during periods of rising costs. Management can manipulate earnings by delaying purchases until after the end of the fiscal year.

Exhibit 7-3 Davis Co. had the following inventory activity during April: -Refer to Exhibit 7-3. Assuming Davis uses a perpetual LIFO cost flow assumption, ending inventory at April 30 would be

On October 17, Conrad Beauty Supplies bought $42,000 of goods with terms of 1/10, n/30. One half of the bill was paid on October 24, and the rest of the bill was paid on October 31. Required: Prepare journal entries for October 24 using the:

The following data has been provided by Lee Company regarding its inventory purchases and sales throughout the year. Required: Compute the cost of goods sold and ending inventory using the perpetual inventory system for the FIFO cost flow assumption.

A perpetual inventory system

The SEC requires a company that uses LIFO to disclose the amount of the differentiation between LIFO and FIFO.

Which one of the following statements is true?

One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers. Required:

When shipping FOB shipping point the seller still retains economic control until the goods are received by the buyer, therefore they should not be recorded into inventory by the buyer until receipt.

In interim reporting, a LIFO liquidation requires the company to forecast the year-end

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters

Exam 7: Inventories: Cost Measurement and Flow Assumptions

What is the cost of goods sold model for a merchandiser? What is the cost of goods sold model for a manufacturer?

On June 1, Dollar Hardware, Inc. had an inventory of 300 gas grills costing $100 each. Purchases and sales during June are as follows: What is the cost of Dollar's inventory on June 30 using the FIFO method?

Exhibit 7-3 Davis Co. had the following inventory activity during April: -Refer to Exhibit 7-3. Assuming Davis uses a periodic FIFO cost flow assumption, ending inventory at April 30 would be

A retail firm would normally use an inventory account titled

.......

Exhibit 7-4 RJ, Inc. had the following activity for an inventory item during June: -Refer to Exhibit 7-4. Assuming RJ, Inc. uses a periodic weighted average cost flow assumption, ending inventory for June would be

For goods sold FOB shipping point, ownership of the inventory is passed when the

A company's liquidation of inventory under LIFO results in higher income during periods of rising costs. Management can manipulate earnings by delaying purchases until after the end of the fiscal year.

Exhibit 7-3 Davis Co. had the following inventory activity during April: -Refer to Exhibit 7-3. Assuming Davis uses a perpetual LIFO cost flow assumption, ending inventory at April 30 would be

On October 17, Conrad Beauty Supplies bought $42,000 of goods with terms of 1/10, n/30. One half of the bill was paid on October 24, and the rest of the bill was paid on October 31. Required: Prepare journal entries for October 24 using the:

The following data has been provided by Lee Company regarding its inventory purchases and sales throughout the year. Required: Compute the cost of goods sold and ending inventory using the perpetual inventory system for the FIFO cost flow assumption.

A perpetual inventory system

The SEC requires a company that uses LIFO to disclose the amount of the differentiation between LIFO and FIFO.

Which one of the following statements is true?

One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers. Required:

When shipping FOB shipping point the seller still retains economic control until the goods are received by the buyer, therefore they should not be recorded into inventory by the buyer until receipt.

In interim reporting, a LIFO liquidation requires the company to forecast the year-end

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters