Harding Systems, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below: At December 31 the ending inventory consisted of 1,500 units. \[\begin{array} { l l l r } \text { Jan.1 } & \text { Beginning inventory } & 1,100 \text { units @ } \$ 7.25 & \$ 7,975 \\ \text { Feb. 7 } & \text { Purchase } & 1,450 \text { units } @ \$ 7.50 & 10,875 \\ \text { July 10 } & \text { Purchase } & 1,600 \text { units } @ \$ 8.00 & 12,800 \\ \text { Nov. 25 } & \text { Purchase } & \underline { 1,000 } \text { units } @ \$ 8.50 & \underline { 8,500 } \\ & \text { Total } & \underline { \underline { 5,150}}& \underline { \underline { 40,150 } } \end{array}\] -Compute the cost of the ending inventory based on the average-cost method of inventory valuation. (Rounded)

A) $10,590. B) $11,694. C) $29,560. D) $28,450. A) $10,590. B) $11,694. C) $29,560. D) $28,450.

Venus Wholesale Co. started carrying a new product in December. Purchases and sales of this product during the month were: $\begin{array}{|l|l|} \hline \text { Dec } 20 & \text { Purchased } 100 \text { units at } \$ 80 \text { per unit. } \\ \hline \text { Dec } 26 & \text { Sold } 80 \text { units. } \\ \hline \text { Dec } 28 & \text { Purchased } 100 \text { units at } \$ 90 \text { per unit. } \\ \hline \end{array}$ -During January, Sundown Corporation had sales of $300,000 and a cost of goods available for sale of $600,000. The company consistently earns a gross profit rate of 45%. Using the gross profit method, the estimated inventory at January 31 amounts to:

A) $135,000. B) $435,000. C) $165,000. D) $465,000. A) $135,000. B) $435,000. C) $165,000. D) $465,000.

Harding Systems, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below: At December 31 the ending inventory consisted of 1,500 units. \[\begin{array} { l l l r } \text { Jan.1 } & \text { Beginning inventory } & 1,100 \text { units @ } \$ 7.25 & \$ 7,975 \\ \text { Feb. 7 } & \text { Purchase } & 1,450 \text { units } @ \$ 7.50 & 10,875 \\ \text { July 10 } & \text { Purchase } & 1,600 \text { units } @ \$ 8.00 & 12,800 \\ \text { Nov. 25 } & \text { Purchase } & \underline { 1,000 } \text { units } @ \$ 8.50 & \underline { 8,500 } \\ & \text { Total } & \underline { \underline { 5,150}}& \underline { \underline { 40,150 } } \end{array}\] -Compute the cost of goods sold for the current year based on the average- cost method of inventory valuation.

A) $10,590. B) $11,700. C) $29,560. D) $28,450. A) $10,590. B) $11,700. C) $29,560. D) $28,450.

Retail method Omega Signs uses the retail method to estimate ending inventory in its monthly financial statements. The following information is available for the month ended April 30: Using the retail method: \[\begin{array} { | l | r | r | } \hline & \text { Cost } & { \text { Retail } } \\ \hline \text { Sales } & & \$ 750,000 \\ \hline \text { Inventory, April 1 } & \$ 300,000 & \$ 500,000 \\ \hline \text { Net purchases } & \underline { 250,000 } &\underline { 500,000} \\ \hline \text { Goods available for sale } & \$ 550,000 & \$ 1,000,000 \\ \hline \end{array}\] (a) Determine the cost ratio that should be used in estimating the Inventory at April 30.$\underline{\quad\quad}$% (b) Estimate the cost of the inventory at April 30.$$\underline{\quad\quad}$ (c) Estimate the cost of goods sold for April. $$\underline{\quad\quad}$

\[\begin{array}{ | l | l | } \hline \tex

Ace Systems, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: On January 28, Ace Systems sells 18 units of this product. The other 12 units remain in inventory at January 31. $\begin{array} {l c c c } & \text { Quantity } & \text { Unit Cost } & \text { Total Cost } \\ \text { Beginning inventory (Jan. 1)}&10 & \$ 27.50 & \$ 275 \\ \text { Purchase (Jan. 15)}&15 & \$ 28.00 & \$ 420 \\ \text { Purchase (Jan. 23)}& \underline { 5 } & \$ 29.00 & \underline { \$ 145 } \\ \text { Total.}& \underline { 30 } & & \underline { \underline { \$ 840 } } \end{array}$ -Assuming that Ace Systems uses the LIFO flow assump?tion, the cost of goods sold on January 28 is:

A) $331. B) $509. C) $499. D) Some other amount. A) $331. B) $509. C) $499. D) Some other amount.

Ace Systems, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: On January 28, Ace Systems sells 18 units of this product. The other 12 units remain in inventory at January 31. $\begin{array} {l c c c } & \text { Quantity } & \text { Unit Cost } & \text { Total Cost } \\ \text { Beginning inventory (Jan. 1)}&10 & \$ 27.50 & \$ 275 \\ \text { Purchase (Jan. 15)}&15 & \$ 28.00 & \$ 420 \\ \text { Purchase (Jan. 23)}& \underline { 5 } & \$ 29.00 & \underline { \$ 145 } \\ \text { Total.}& \underline { 30 } & & \underline { \underline { \$ 840 } } \end{array}$ -Assuming that Ace Systems uses the average cost flow assumption, the cost of goods sold to be recorded at January 28 is:

A) $504. B) $336. C) $499. D) Some other amount. A) $504. B) $336. C) $499. D) Some other amount.

Exam 8: Inventories and the Cost of Goods Sold

Harding Systems, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below: At December 31 the ending inventory consisted of 1,500 units. Jan.1 Beginning inventory 1,100 units @ \ 7.25 \ 7,975 Feb. 7 Purchase 1,450 units @\ 7.50 10,875 July 10 Purchase 1,600 units @\ 8.00 12,800 Nov. 25 Purchase units @\ 8.50 Total -Compute the cost of the ending inventory based on the average-cost method of inventory valuation. (Rounded)

(Multiple Choice)

4.9/5

(37)

Question 81

The cost flow assumption selected by a company must correspond to the actual physical movement of the company's merchandise.

(True/False)

4.8/5

(46)

Question 82

Venus Wholesale Co. started carrying a new product in December. Purchases and sales of this product during the month were: Dec 20 Purchased 100 units at \ 80 per unit. Dec 26 Sold 80 units. Dec 28 Purchased 100 units at \ 90 per unit. -During January, Sundown Corporation had sales of $300,000 and a cost of goods available for sale of $600,000. The company consistently earns a gross profit rate of 45%. Using the gross profit method, the estimated inventory at January 31 amounts to:

(Multiple Choice)

4.8/5

(30)

Question 83

Harding Systems, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below: At December 31 the ending inventory consisted of 1,500 units. Jan.1 Beginning inventory 1,100 units @ \ 7.25 \ 7,975 Feb. 7 Purchase 1,450 units @\ 7.50 10,875 July 10 Purchase 1,600 units @\ 8.00 12,800 Nov. 25 Purchase units @\ 8.50 Total -Compute the cost of goods sold for the current year based on the average- cost method of inventory valuation.

(Multiple Choice)

4.8/5

(33)

Question 84

The primary purpose of an inventory flow assumption is to:

(Multiple Choice)

4.8/5

(43)

Question 85

Merchandise sold F.O.B. destination belongs to the buyer while in transit.

(True/False)

4.9/5

(33)

Question 86

A company with a liquid inventory will have:

(Multiple Choice)

4.8/5

(35)

Question 87

During periods of rising prices, and being primarily concerned with tax implications, most companies would select:

(Multiple Choice)

4.9/5

(42)

Question 88

Harris Corporation's inventory of a particular product includes 200 units purchased at a per-unit cost of $50, and another 100 units purchased at a unit cost of $60. If Harris sells 10 units of this product, the cost of goods sold will be:

(Multiple Choice)

4.7/5

(47)

Question 89

The higher a company's inventory turnover rate, the higher its gross profit.

(True/False)

4.9/5

(42)

Question 90

The principle of consistency states that:

(Multiple Choice)

4.8/5

(34)

Question 91

Gross profit method On April 30, Greenfield Sales, Inc. lost its entire inventory in a flood. The following information is available from the company's accounting records, which were recovered from the waterproof safe: The gross profit of Greenfield Sales, Inc. over the past several years has consistently averaged 35% of net sales. Using the gross profit method, estimate the cost of the inventory lost in the flood on April 30. Inventory, January 1 \ 325,000 Purchases, January 1 through April 30 \ 675,000 Net sales, January 1 through April 30 \ 975,000

(Essay)

4.7/5

(36)

Question 92

If the ending inventory is overstated in the current year:

(Multiple Choice)

4.7/5

(35)

Question 93

Many companies state in their annual reports that inventory is shown at the lower of its cost or market value. This means that the inventory:

(Multiple Choice)

4.8/5

(37)

Question 94

Allied Products maintains a large inventory. The company has used the LIFO inventory method for many years, during which the purchase costs of its products have risen substantially. (More than one of the following answers may be correct.)

(Multiple Choice)

4.8/5

(40)

Question 95

Retail method Omega Signs uses the retail method to estimate ending inventory in its monthly financial statements. The following information is available for the month ended April 30: Using the retail method: Cost Retail Sales \ 750,000 Inventory, April 1 \ 300,000 \ 500,000 Net purchases Goods available for sale \ 550,000 \ 1,000,000 (a) Determine the cost ratio that should be used in estimating the Inventory at April 30. $\underline{\quad\quad}$ % (b) Estimate the cost of the inventory at April 30.$ $\underline{\quad\quad}$ (c) Estimate the cost of goods sold for April. $ $\underline{\quad\quad}$

(Essay)

4.9/5

(35)

Question 96

Ace Systems, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: On January 28, Ace Systems sells 18 units of this product. The other 12 units remain in inventory at January 31. Quantity Unit Cost Total Cost Beginning inventory (Jan. 1) 10 \ 27.50 \ 275 Purchase (Jan. 15) 15 \ 28.00 \ 420 Purchase (Jan. 23) \ 29.00 Total. -Assuming that Ace Systems uses the LIFO flow assump?tion, the cost of goods sold on January 28 is:

(Multiple Choice)

4.9/5

(47)

Question 97

Ace Systems, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: On January 28, Ace Systems sells 18 units of this product. The other 12 units remain in inventory at January 31. Quantity Unit Cost Total Cost Beginning inventory (Jan. 1) 10 \ 27.50 \ 275 Purchase (Jan. 15) 15 \ 28.00 \ 420 Purchase (Jan. 23) \ 29.00 Total. -Assuming that Ace Systems uses the average cost flow assumption, the cost of goods sold to be recorded at January 28 is:

(Multiple Choice)

4.7/5

(34)

Question 98

In which of these inventory cost flow assumptions is it important to determine the actual cost of a particular inventory item being sold in order to determine cost of goods sold?

(Multiple Choice)

4.8/5

(39)

Question 99

During a period of steadily rising prices, which of the following inventory valuation methods is likely to result in the lowest cost of goods sold?

(Multiple Choice)

4.8/5

(41)

Question 100

The cost flow assumption selected by a company must correspond to the actual physical movement of the company's merchandise.

The primary purpose of an inventory flow assumption is to:

Merchandise sold F.O.B. destination belongs to the buyer while in transit.

A company with a liquid inventory will have:

During periods of rising prices, and being primarily concerned with tax implications, most companies would select:

Harris Corporation's inventory of a particular product includes 200 units purchased at a per-unit cost of $50, and another 100 units purchased at a unit cost of $60. If Harris sells 10 units of this product, the cost of goods sold will be:

The higher a company's inventory turnover rate, the higher its gross profit.

The principle of consistency states that:

If the ending inventory is overstated in the current year:

Many companies state in their annual reports that inventory is shown at the lower of its cost or market value. This means that the inventory:

Allied Products maintains a large inventory. The company has used the LIFO inventory method for many years, during which the purchase costs of its products have risen substantially. (More than one of the following answers may be correct.)

In which of these inventory cost flow assumptions is it important to determine the actual cost of a particular inventory item being sold in order to determine cost of goods sold?

During a period of steadily rising prices, which of the following inventory valuation methods is likely to result in the lowest cost of goods sold?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

The Time Value of Money

Filters