Exam 7: Inventories

The following units of a particular item were available for sale during the year: The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

The lower of cost or market is a method of inventory valuation.

During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory.

Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?

Beginning inventory, purchases and sales data for T-shirts are as follows: Assuming the business maintains a periodic inventory system, calculate the cost of merchandise sold and ending inventory under the following assumptions: a. FIFO b. LIFO c. Average cost (round cost of merchandise sold and ending inventory to the nearest dollar)

Under the periodic inventory system, a physical inventory is taken to determine the cost of the inventory on hand and the cost of the merchandise sold.

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Assuming that the company uses the perpetual inventory system, determine the ending inventory for the month of May using the LIFO inventory cost method.

The units of Manganese Plus available for sale during the year were as follows: There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the LIFO inventory cost method.

Assume that three identical units of merchandise are purchased during October, as follows: Assume one unit is sold on October 31 for $28. Determine Cost of Merchandise Sold, Gross Profit, and Ending Inventory under the LIFO method.

The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the average cost method?

The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the FIFO method?

The average cost method will always yield results between FIFO and LIFO.

The following data were taken from the annual reports of Jong Inc., a manufacturer of fireworks, and Hobson Inc., a manufacturer of computers. (a) Determine the (1) inventory turnover and (2) number of day's sales in inventory for Jong and Hobson. Round your answer to two decimal places. (b) How would you expect these measures to compare between the companies? Why?

The following data were taken from Bowman Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Bowman Inc. Round to two decimal places. Inventory turnover = Cost of merchandise sold / Average inventory Inventory turnover = 894,000 / ((78,000 + 92,000)/2) Inventory turnover = 894,000 / 85,000 Inventory turnover = 10.52

A company will most likely use an estimated method of determining inventory when

Generally, the lower the number of days' sales in inventory, the better.

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

Direct disposal costs do not include special advertising or sales commissions.

During the taking of its physical inventory on December 31, 2011, Gentry Supplies Company incorrectly counted its inventory as $245,000 instead of the correct amount of $254,000. Indicate the affect of the misstatement on Gentry Supplies Company's balance sheet and income statement for the year ended December 31, 2011.