Question 1

Use the following inventory related information for Questions below
 
-Calculate the company's Ending Inventory on January 31 using Periodic LIFO.

Accepted Answer

A)  $430 
B)  $454 
C)  $544 
D)  $565

Question 2

Companies using LIFO are required to disclose the amount at which inventory would have been reported had the company used FIFO. The difference between LIFO and FIFO inventories is called the LIFO reserve.

Accepted Answer

A) True 
 B)False

Question 3

Nelson Corporation sells three different products. The following information is available on December 31:
 When applying the lower of cost or net realizable value rule to each item, what will Nelson report as its cost of ending inventory on December 31?

Accepted Answer

A)  $2,300 
B)  $2,200 
C)  $2,650 
D)  $2,000

Question 4

Use the following information to answer Questions below
The following data represent the beginning inventory and, in the order of occurrence, the purchases and sales of McKensie Company for an operating period. 
 
-Assuming McKensie Company uses LIFO perpetual inventory procedures, sale no. 2 is recorded as an entry to Cost of Goods Sold for:

Accepted Answer

A)  $2,880 
B)  $2,560 
C)  $2,550 
D)  $2,544 
E)  None of the above

Question 5

The following data represent the beginning inventory and, in order of occurrence, the purchases and sales of Newtown, Inc. for an operating period. 
 
-Assuming Newtown, Inc., uses weighted-average inventory procedures, the ending inventory cost is:

Accepted Answer

A)  $720.10 
B)  $721.00 
C)  $722.00 
D)  $795.90 
E)  None of the above

Question 6

Crown Company imports and sells a product produced in Germany. In the summer of 2018, a natural disaster disrupted production, affecting its supply of product. Crown uses the LIFO inventory method. On January 1, 2019, Crown's inventory records were as follows:
 
 Through mid-December of 2019, purchases were limited to 50,000 units, because the cost had increased to $25 per unit. Crown sold 55,000 units during 2019 at a selling price of $50 per unit, which significantly depleted its inventory. The cost was expected to drop to $21 per unit by early January, 2020.
Required:
a. Assume that Crown makes no further purchases during 2019. Compute the gross profit for 2019.
b. Assume that Crown purchases 8,800 units before the end of December, 2019 at $25 each. Compute its gross profit for 2019.
c. If Crown's corporate tax rate is 30%, how much tax savings will result from the purchase of inventory before year end?

Accepted Answer

The answer of Crown Company imports and sells a product...

Question 7

In its 2019 income statement, Riley Company reported cost of goods sold of $85,000. Later, Riley determined that beginning inventory was understated by $23,000, and the ending inventory was understated by $10,000.
What should be the corrected amount for cost of goods sold for 2019?

Accepted Answer

A)  $98,000 
B)  $72,000 
C)  $95,000 
D)  $85,000

Question 8

Tisdell Fabricators, Inc., has 10 units in beginning inventory costing $15 each. It purchased 90 more for $12 each during the month. The company sold 80 units during the month.
Calculate cost of goods sold using:
a. FIFO
b. Weighted-average cost
c. LIFO

Accepted Answer

The answer of Tisdell Fabricators, Inc., has 10 units in...

Question 9

Use the following inventory related information for Questions below
 
-Assuming a periodic inventory system is used, what is ending inventory under the Weighted-Average Cost method?

Accepted Answer

A)  $2,314 
B)  $3,875 
C)  $2,025 
D)  $3,375

Question 10

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement?

Accepted Answer

A)  FIFO 
B)  Average Cost 
C)  LIFO 
D)  All of these give equal values for cost of goods sold

Question 11

The following inventory was available for sale during the year for Mega Tools:
 
Mega has 25 units on hand at the end of the year. What is the dollar amount of inventory at the end of the year according to the first-in, first-out method?

Accepted Answer

A)  $1,650 
B)  $2,975 
C)  $1,575 
D)  $1,950

Question 12

Use the following information to answer Questions below
The following data represent the beginning inventory and, in order of occurrence, the purchases and sales of Blunt, Inc., for an operating period. 
 
-Assuming Blunt, Inc., uses LIFO perpetual inventory procedures, sale no. 2 is recorded as an entry to Cost of Goods Sold for:

Accepted Answer

A)  $280 
B)  $400 
C)  $370 
D)  $440 
E)  None of the above

Question 13

Use the following inventory related information for Questions below
 
-Assuming a periodic inventory system is used, what is cost of goods sold under FIFO?

Accepted Answer

A)  $2,100 
B)  $2,400 
C)  $3,300 
D)  $3,000

Question 14

The lower-of-cost-or-net realizable value rule for inventory may be applied to:

Accepted Answer

A)  Each inventory item 
B)  The totals of major inventory classes or categories 
C)  The total inventory 
D)  All of the above 
E)  None of the above

Question 15

Blue Danube Tires has the following inventory records for the month ending July 31:
 
 Blue Danube sold 140 tires during July. Compute the ending inventory and the cost of goods sold for the period using FIFO, LIFO, and weighted-average cost inventory methods.

Accepted Answer

The answer of Blue Danube Tires has the following inventory...

Question 16

Use the following information to answer Questions below
The following data represent the beginning inventory and, in the order of occurrence, the purchases and sales of McKensie Company for an operating period. 
 
-Assuming McKensie Company uses FIFO perpetual inventory procedures, sale no. 1 is recorded as an entry to Cost of Goods Sold for:

Accepted Answer

A)  $900 
B)  $910 
C)  $890 
D)  $960 
E)  None of the above

Question 17

Use the following inventory related information for Questions below
On September 1, the beginning inventory was 110 units at $50 each. Purchases and sales during September were:
 
-What is the cost of inventory on September 30 if the periodic LIFO costing alternative is used?

Accepted Answer

A)  $7,160 
B)  $5,520 
C)  $6,620 
D)  $6,500

Question 18

During its first and second years of operations, Forrester Company, a corporation using a periodic inventory system, made undiscovered errors in taking its year-end inventories that understated Year 1 ending inventory by $40,000 and overstated Year 2 ending inventory by $55,000.
The combined effect of these errors on reported income is:

Accepted Answer

The answer of During its first and second years of...

Question 19

Use the following inventory related information for Questions below
On September 1, the beginning inventory was 110 units at $50 each. Purchases and sales during September were:
 
-What is the cost of goods sold for September if the periodic FIFO costing alternative is used?

Accepted Answer

A)  $13,920 
B)  $12,880 
C)  $13,980 
D)  $13,900

Question 20

The lower-of-cost-or-net realizable value rule for inventory:

Accepted Answer

A)  States that inventory must be reported on the balance sheet at its current replacement cost 
B)  Must be applied to inventory on an item by item basis 
C)  Places losses from price declines in the period the goods are sold rather than in the period of the price decline 
D)  May cause inventory to be written up to an amount larger than historic cost 
E)  None of the above

Exam 7: Inventory

Use the following inventory related information for Questions below -Calculate the company's Ending Inventory on January 31 using Periodic LIFO.

Companies using LIFO are required to disclose the amount at which inventory would have been reported had the company used FIFO. The difference between LIFO and FIFO inventories is called the LIFO reserve.

Nelson Corporation sells three different products. The following information is available on December 31: When applying the lower of cost or net realizable value rule to each item, what will Nelson report as its cost of ending inventory on December 31?

The following data represent the beginning inventory and, in order of occurrence, the purchases and sales of Newtown, Inc. for an operating period. -Assuming Newtown, Inc., uses weighted-average inventory procedures, the ending inventory cost is:

In its 2019 income statement, Riley Company reported cost of goods sold of $85,000. Later, Riley determined that beginning inventory was understated by $23,000, and the ending inventory was understated by $10,000. What should be the corrected amount for cost of goods sold for 2019?

Tisdell Fabricators, Inc., has 10 units in beginning inventory costing $15 each. It purchased 90 more for $12 each during the month. The company sold 80 units during the month. Calculate cost of goods sold using: a. FIFO b. Weighted-average cost c. LIFO

Use the following inventory related information for Questions below -Assuming a periodic inventory system is used, what is ending inventory under the Weighted-Average Cost method?

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement?

The following inventory was available for sale during the year for Mega Tools: Mega has 25 units on hand at the end of the year. What is the dollar amount of inventory at the end of the year according to the first-in, first-out method?

Use the following inventory related information for Questions below -Assuming a periodic inventory system is used, what is cost of goods sold under FIFO?

The lower-of-cost-or-net realizable value rule for inventory may be applied to:

Blue Danube Tires has the following inventory records for the month ending July 31: Blue Danube sold 140 tires during July. Compute the ending inventory and the cost of goods sold for the period using FIFO, LIFO, and weighted-average cost inventory methods.

Use the following inventory related information for Questions below On September 1, the beginning inventory was 110 units at $50 each. Purchases and sales during September were: -What is the cost of inventory on September 30 if the periodic LIFO costing alternative is used?

Use the following inventory related information for Questions below On September 1, the beginning inventory was 110 units at $50 each. Purchases and sales during September were: -What is the cost of goods sold for September if the periodic FIFO costing alternative is used?

The lower-of-cost-or-net realizable value rule for inventory: