Question 1

A company made the following merchandise purchases and sales during the current month:
 $\begin{array}{|l|l|l|l|}
\hline \text { July 1 purchased } & 380 & \text { units at } & \$ 15 \text { each } \
\hline \text { July 5 purchased } & 270 & \text { units at } & \$ 20 \text { each } \
\hline \text { July 9 sold } & 500 & \text { units at } & \$ 55 \text { each } \
\hline \text { July 14 purchased } & 300 & \text { units at } & \$ 24 \text { each } \
\hline \text { July 20 sold } & 250 & \text { units at } & \$ 55 \text { each } \
\hline \text { July 30 purchased } & 250 & \text { units at } & \$ 30 \text { each }\
\hline
\end{array}$ 
There was no beginning inventory.If the company uses the last-in,first-out perpetual inventory system,what would be the cost of the ending inventory?

Accepted Answer

The answer of A company made the following merchandise purchases...

Question 2

A company has inventory of 10 units at a cost of $10 each on June 1.On June 3,they purchased 20 units at $12 each.12 units are sold on June 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that were sold?

Accepted Answer

A) $120 
B) $124 
C) $128 
D) $130 
E) $140

Question 3

Goods in transit are automatically included in a company's inventory account.

Accepted Answer

A) True 
 B)False

Question 4

Given the following information,determine the cost of goods sold at December 31 using the Weighted Average periodic inventory method.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit
December 15: 20 units were purchased at $10.15 per unit
December 22: 18 units were sold at $35 per unit

Accepted Answer

A) $282.15 
B) $332.10 
C) $284.70 
D) $290.70 
E) $210.30

Question 5

Monitor Company uses the LIFO method for valuing its ending inventory.The following financial statement information is available for their first year of operation:
 $\begin{array}{c}
 \text { Monitor Company}\
 \text { Income Statement}\
 \text { For the year ended December 31}\\begin{array}{|l|r|}
\hline \text { Sales }& \$ 50,000 \
\hline \text { Cost of goods sold }  \quad \quad \quad \quad \quad \quad \quad \quad& 23,000 \
\hline \text { Gross profit } & \$ 27,000 \
\hline \text { Expenses } & \underline{13,000} \
\hline \text { Income before taxes } & \$ 14,000\
\hline 
\end{array}\end{array}$ 
Monitor's ending inventory using the LIFO method was $8,200.Monitor's accountant determined that had they used FIFO,the ending inventory would have been $8,500. 
a. Determine what the income before taxes would have been, had Monitor used the FIFO method of inventory valuation instead of LIFO
b. What would be the difference in income taxes between LIFO and FIFO, assuming a 30% tax rate?

Accepted Answer

The answer of Monitor Company uses the LIFO method for...

Question 6

One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item.

Accepted Answer

A) True 
 B)False

Question 7

When the __________ method is used with a periodic inventory system,cost of goods sold is assigned costs from the most recent purchases for the period.

Accepted Answer

The answer of When the __________ method is used with...

Question 8

In applying the lower of cost or market method to inventory valuation,market is defined as the current selling price.

Accepted Answer

A) True 
 B)False

Question 9

An overstatement of ending inventory will cause

Accepted Answer

A) An overstatement of assets and equity on the balance sheet 
B) An understatement of assets and equity on the balance sheet 
C) An overstatement of assets and an understatement of equity on the balance sheet 
D) An understatement of assets and an overstatement of equity on the balance sheet 
E) No effect on the balance sheet

Question 10

Given the following items and costs as of the balance sheet date,determine the value of Faltron Company's merchandise inventory.
$1,000 goods sold by Faltron to another company.The goods are in transit and shipping terms are FOB destination.
$2,000 goods sold by another company to Faltron.The goods are in transit and shipping terms are FOB destination.
$3,000 owned by Faltron but in the possession of another company the consignee.
Damaged goods owned by Faltron which originally cost $4,000,but which now have a $500 net realizable value.

Accepted Answer

A) $10,000 
B) $6,500 
C) $5,500 
D) $5,000 
E) $4,500

Question 11

Given the following information,determine the cost of ending inventory at November 30 using the LIFO perpetual inventory method.
November 3: 15 units were purchased at $8 per unit.
November 11: 18 units were purchased at $9.50 per unit.
November 15: 15 units were sold at $45 per unit
November 18: 30 units were purchased at $10.75 per unit
November 30: 20 units were sold at $55 per unit

Accepted Answer

The answer of Given the following information,determine the cost of...

Question 12

A company's total cost of inventory was $305,000 and its market value is $297,000.Under the lower cost or market,the amount reported should be $305,000.

Accepted Answer

A) True 
 B)False

Question 13

Explain the effects of inventory valuation methods on the cost of ending inventory,income and income taxes.

Accepted Answer

The answer of Explain the effects of inventory valuation methods...

Question 14

Given the following information,determine the cost of goods sold for December 31 using the FIFO periodic inventory method.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit
December 15: 20 units were purchased at $10.15 per unit
December 22: 18 units were sold at $35 per unit

Accepted Answer

A) $282.15 
B) $332.10 
C) $281.25 
D) $297.00 
E) $284.70

Question 15

Acme-Jones Corporation uses a weighted-average perpetual inventory system.
August 2,10 units were purchased at $12 per unit.
August 18,15 units were purchased at $14 per unit.
August 29,12 units were sold.
What was the amount of the cost of goods sold for this sale?

Accepted Answer

A) $148.00 
B) $150.50 
C) $158.40 
D) $210.00 
E) $330.00

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Errors in the period-end inventory balances only have an impact on the current period's records and financial statements.

Accepted Answer

A) True 
 B)False

Question 18

During a period of steadily rising costs,the inventory valuation method that yields the lowest reported net income is:

Accepted Answer

A) Specific identification method 
B) Average cost method 
C) Weighted-average method 
D) FIFO method 
E) LIFO method

Question 19

In applying the lower of cost or market method to inventory valuation,market is defined as:

Accepted Answer

A) Historical cost 
B) Current replacement cost 
C) Current sales price 
D) FIFO 
E) LIFO

Question 20

Describe the internal controls that must be applied when taking a physical count of inventory.

Accepted Answer

The answer of Describe the internal controls that must be...

Exam 5: Reporting and Analyzing Inventories

A company has inventory of 10 units at a cost of $10 each on June 1.On June 3,they purchased 20 units at $12 each.12 units are sold on June 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that were sold?

Goods in transit are automatically included in a company's inventory account.

One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item.

When the __________ method is used with a periodic inventory system,cost of goods sold is assigned costs from the most recent purchases for the period.

In applying the lower of cost or market method to inventory valuation,market is defined as the current selling price.

An overstatement of ending inventory will cause

A company's total cost of inventory was $305,000 and its market value is $297,000.Under the lower cost or market,the amount reported should be $305,000.

Explain the effects of inventory valuation methods on the cost of ending inventory,income and income taxes.

Acme-Jones Corporation uses a weighted-average perpetual inventory system. August 2,10 units were purchased at $12 per unit. August 18,15 units were purchased at $14 per unit. August 29,12 units were sold. What was the amount of the cost of goods sold for this sale?

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

Errors in the period-end inventory balances only have an impact on the current period's records and financial statements.

During a period of steadily rising costs,the inventory valuation method that yields the lowest reported net income is:

In applying the lower of cost or market method to inventory valuation,market is defined as:

Describe the internal controls that must be applied when taking a physical count of inventory.