Exam 6: Inventories and Cost of Sales

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory. If the company uses the weighted average periodic method, what would be the cost of the ending inventory?

A company sells a climbing kit and uses the perpetual inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during January were as follows: If the ending inventory is reported at $276, what inventory method was used?

Identify and describe the four inventory valuation methods.

Identify the items that are included in merchandise inventory. (In your answer address the special situations of goods in transit, consigned goods, and damaged goods.)

Merchandise inventory includes:

IFRS reporting currently does not allow which method of inventory costing?

In the retail inventory method of inventory valuation, the retail amount of inventory refers to its dollar amount measured using selling prices of inventory items.

What is the effect of an error in the ending inventory balance on the income statement?

The cost of an inventory item includes the ____________, plus ______________ costs necessary to put it in a place and condition for sale.

A company made the following merchandise purchases and sales during the month of July: There was no beginning inventory. If the company uses the first-in, first-out method and the perpetual system, what would be the cost of the ending inventory?

Goods on consignment are goods shipped by their owner, called the consignee, to another party called the consignor.

Damaged and obsolete goods that can be sold:

The inventory turnover ratio is computed by dividing average merchandise inventory by cost of goods sold.

Use the following information for Razor Company to compute inventory turnover for 2011.

Costs included in the Merchandise Inventory account can include all of the following except:

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory. If the company uses the LIFO periodic inventory method, what would be the cost of the ending inventory?

The City Store reported the following amounts on their financial statements for Year 1, Year 2, and Year 3: It was discovered early in Year 4 that the ending inventory on December 31, Year 1 was overstated by $6,000, and the ending inventory on December 31, Year 2 was understated by $2,500. The ending inventory on December 31, Year 3 was correct. Ignoring income taxes determine the correct amounts of cost of goods sold, net income, total current assets, and equity for each of the years Year 1, Year 2, and Year 3.

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

A company uses the retail inventory method and has the following information available concerning its most recent accounting period: 1. What is the cost-to-retail ratio using the retail method? 2. What is the estimated cost of the ending inventory?

A company can change its inventory costing method without mentioning this change in its financial statements because it is an internal management decision.