Question 1

Retrospective treatment of prior years' financial statements is required when there is a change from:

Accepted Answer

A) Average cost to FIFO. 
B) FIFO to average cost. 
C) LIFO to average cost. 
D) All of these. 
A) Average cost to FIFO. 
B) FIFO to average cost. 
C) LIFO to average cost. 
D) All of these.

Question 2

The conventional cost-to-retail percentage is:

Accepted Answer

A) 54.9%. 
B) 58.9%. 
C) 53.6%. 
D) 70.6%.54.9% 
A) 54.9%. 
B) 58.9%. 
C) 53.6%. 
D) 70.6%.54.9%

Question 3

In determining lower-of-cost-or-market, market is the expected selling price under normal operations.

Accepted Answer

A) True 
 B)False

Question 4

Net realizable value is selling price less costs of completion and disposal.

Accepted Answer

A) True 
 B)False

Question 5

Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the following year. As a result, Prunedale's cost of goods sold for this year was:

Accepted Answer

A) Overstated by $94,000. 
B) Overstated by $30,000. 
C) Understated by $94,000. 
D) Understated by $30,000.Overstatement of beginning inventory overstates cost of goods sold and the understatement of ending inventory overstates cost of goods sold: $32,000 + 62,000 = $94,000 overstatement of cost of goods sold 
A) Overstated by $94,000. 
B) Overstated by $30,000. 
C) Understated by $94,000. 
D) Understated by $30,000.Overstatement of beginning inventory overstates cost of goods sold and the understatement of ending inventory overstates cost of goods sold: $32,000 + 62,000 = $94,000 overstatement of cost of goods sold

Question 6

Briefly explain the financial reporting required when material misstatements are found in previous years' financial statements that are included for comparative purposes in the current year's financial statements.

Accepted Answer

Material errors in prior years require p

Question 7

In the following questions, inventory errors are noted for 2009. Assume that the errors are not discovered until 2010, and that the company uses a periodic inventory system. Indicate the effect of the error, if any, on the accounts noted in the columns, using the following code:
U = understated; O = Overstated; NE = No effect

-$$\begin{array} { | l | l | l | } 
\hline  { \text { Error } } & \text { Cost of goods sold } & \text { Retained earnings } \
\hline \begin{array} { l } 
\text { Recorded purchases for } \$ 523,000 \text { that } \
\text { should have been } \$ 532,000 .
\end{array} & & \
\hline
\end{array}$$

Accepted Answer

The answer of  In the following questions, inventory errors...

Question 8

Green Acres Co. has elected to use the dollar-value LIFO retail method to value its inventory. The following data has been accumulated from the accounting records:
Pertinent retail price indexes:
Required:
Estimate the cost of ending inventory for December 31, 2009.

Accepted Answer

The answer of Green Acres Co. has elected to use...

Question 9

So. California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2009. In preparing their insurance claim on the inventory loss, they developed the following data: Inventory January 1, 2009, $300,000; sales and purchases from January 1, 2009, to May 1, 2009, $1,300,000 and $875,000, respectively. So. California consistently reports a 40% gross profit. The estimated inventory on May 1, 2009, is:

Accepted Answer

A) $302,500. 
B) $360,000. 
C) $395,000. 
D) $455,000. 
A) $302,500. 
B) $360,000. 
C) $395,000. 
D) $455,000.

Question 10

At what amount will Johnson record the inventory purchased on February 1, 2010?

Accepted Answer

A) $210,000 
B) $200,000 
C) $180,000 
D) $190,000 In 2009, loss of $20,000 recognized ($200,000 - 180,000) and liability established for the estimated loss on purchase commitment.When the inventory is purchased for $200,000, the following journal entry records the transaction: 
A) $210,000 
B) $200,000 
C) $180,000 
D) $190,000 In 2009, loss of $20,000 recognized ($200,000 - 180,000) and liability established for the estimated loss on purchase commitment.When the inventory is purchased for $200,000, the following journal entry records the transaction:

Question 11

Andover Stores uses the average cost retail method to estimate its ending inventory. Information as of June 30, 2009, is as follows:
Required:
Use the retail method to estimate the June 30, 2009, inventory.
 $\begin{array}{lrr}&\text { Cost } & \text { Retail }\
\text { Beginning inventory } & \$ 45,000 & \$ 82,000 \
\text { Net purchases } & 245,000 & 418,000 \
\text { Net sales } & & 400,000
\end{array}$

Accepted Answer

The answer of Andover Stores uses the average cost retail...

Question 12

Cindy Lou Linens uses the conventional retail method to estimate its ending inventories. The company records sales net of employee discounts. The following partial data has been summarized for the year ended December 31, 2009:
Required:
Compute the net markups for Cindy Lou Linens during 2009.
 $$\begin{array} { l c r } 
& \text { Cost } & { \text { Retail } } \
\text { Inventory, January 1 } & \$ 465,460 & \$ 736,000 \
\text { Purchases } & 1,412,000 & 2,344,000 \
\text { Net markups } & & ? ? ? \
\text { Net markdowns } & & 48,200 \
\text { Normal spoilage } & & 43,200 \
\text { Employee discounts } & & 75,600 \
\text { Net sales } & & 2,138,000 \
\text { Inventory, Dec. 31 } & 494,460 & 824,100
\end{array}$$

Accepted Answer

The answer of Cindy Lou Linens uses the conventional retail...

Question 13

The estimated ending inventory at retail is:

Accepted Answer

A) $27,300. 
B) $25,000. 
C) $26,600. 
D) $26,400.$25,000 
A) $27,300. 
B) $25,000. 
C) $26,600. 
D) $26,400.$25,000

Question 14

In the following questions, inventory errors are noted for 2009. Assume that the errors are not discovered until 2010, and that the company uses a periodic inventory system. Indicate the effect of the error, if any, on the accounts noted in the columns, using the following code:
U = understated; O = Overstated; NE = No effect

-$$\begin{array} { | c | c | c | } 
\hline \text { Error } & \text { Cost of goods sold } & \text { Retained earnings } \
\hline \text { Double counted items in ending inventory } & & \
\hline
\end{array}$$

Accepted Answer

The answer of  In the following questions, inventory errors...

Question 15

Required: Determine the balance sheet inventory carrying value assuming the LCM rule is applied to the total inventory.

Accepted Answer

The answer of Required: Determine the balance sheet inventory carrying...

Question 16

In the following questions, inventory errors are noted for 2009. Assume that the errors are not discovered until 2010, and that the company uses a periodic inventory system. Indicate the effect of the error, if any, on the accounts noted in the columns, using the following code:
U = understated; O = Overstated; NE = No effect

-$$\begin{array} { | l | l | l | } 
\hline  { \text { Error } } & \text { Cost of goods sold } & \text { Retained earnings } \
\hline \text { Unrecorded purchases } & & \
\hline
\end{array}$$

Accepted Answer

The answer of  In the following questions, inventory errors...

Question 17

In determining the cost-to-retail percentage for the current year,:

Accepted Answer

A) Net markups are included. 
B) Net markdowns are excluded. 
C) Net sales are included. 
D) All of these are correct. 
A) Net markups are included. 
B) Net markdowns are excluded. 
C) Net sales are included. 
D) All of these are correct.

Question 18

Charleston Company has elected to use the dollar-value LIFO retail method to value its inventory. The following data has been accumulated from the accounting records:
Required:
Estimate the ending inventory for December 31, 2009.

Accepted Answer

The answer of Charleston Company has elected to use the...

Question 19

To the nearest thousand, the estimated ending inventory at cost is:

Accepted Answer

A) $16,000. 
B) $15,000. 
C) $13,000. 
D) $19,000.$16,000 
A) $16,000. 
B) $15,000. 
C) $13,000. 
D) $19,000.$16,000

Question 20

The numerator for the current period's cost-to-retail percentage is:

Accepted Answer

A) $64,800. 
B) $48,100. 
C) $47,700. 
D) $49,800.$49,800 
A) $64,800. 
B) $48,100. 
C) $47,700. 
D) $49,800.$49,800

Retrospective treatment of prior years' financial statements is required when there is a change from:

The conventional cost-to-retail percentage is:

In determining lower-of-cost-or-market, market is the expected selling price under normal operations.

Net realizable value is selling price less costs of completion and disposal.

Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the following year. As a result, Prunedale's cost of goods sold for this year was:

Briefly explain the financial reporting required when material misstatements are found in previous years' financial statements that are included for comparative purposes in the current year's financial statements.

Green Acres Co. has elected to use the dollar-value LIFO retail method to value its inventory. The following data has been accumulated from the accounting records: Pertinent retail price indexes: Required: Estimate the cost of ending inventory for December 31, 2009.

At what amount will Johnson record the inventory purchased on February 1, 2010?

The estimated ending inventory at retail is:

Required: Determine the balance sheet inventory carrying value assuming the LCM rule is applied to the total inventory.

In determining the cost-to-retail percentage for the current year,:

Charleston Company has elected to use the dollar-value LIFO retail method to value its inventory. The following data has been accumulated from the accounting records: Required: Estimate the ending inventory for December 31, 2009.

To the nearest thousand, the estimated ending inventory at cost is:

The numerator for the current period's cost-to-retail percentage is:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement and Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Operational Assets: Acquisition and Disposition

Operational Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Appendix a Derivatives

Filters

Exam 9: Inventories: Additional Issues

Retrospective treatment of prior years' financial statements is required when there is a change from:

The conventional cost-to-retail percentage is:

In determining lower-of-cost-or-market, market is the expected selling price under normal operations.

Net realizable value is selling price less costs of completion and disposal.

Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the following year. As a result, Prunedale's cost of goods sold for this year was:

Briefly explain the financial reporting required when material misstatements are found in previous years' financial statements that are included for comparative purposes in the current year's financial statements.

Green Acres Co. has elected to use the dollar-value LIFO retail method to value its inventory. The following data has been accumulated from the accounting records: Pertinent retail price indexes: Required: Estimate the cost of ending inventory for December 31, 2009.

At what amount will Johnson record the inventory purchased on February 1, 2010?

The estimated ending inventory at retail is:

Required: Determine the balance sheet inventory carrying value assuming the LCM rule is applied to the total inventory.

In determining the cost-to-retail percentage for the current year,:

Charleston Company has elected to use the dollar-value LIFO retail method to value its inventory. The following data has been accumulated from the accounting records: Required: Estimate the ending inventory for December 31, 2009.

To the nearest thousand, the estimated ending inventory at cost is:

The numerator for the current period's cost-to-retail percentage is:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement and Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Operational Assets: Acquisition and Disposition

Operational Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Appendix a Derivatives

Filters