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Exam 6: Inventories and Cost of Sales

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Question 51

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Generally accepted accounting principles require that the inventory of a company be reported at:

A) Market value.
B) Historical cost.
C) Lower of cost or market.
D) Replacement cost.
E) Retail value.

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Question 52

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When applying the lower of cost or market method of inventory valuation,market is defined as the ______________________.

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Question 53

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Sandoval needs to determine its year-end inventory.The warehouse contains 20,000 units,of which 3,000 were damaged by flood and are not sellable.Another 2,000 units were purchased from Markor Company,FOB shipping point,and are currently in transit.The company also consigns goods and has 4,000 units at a consignee's location.How many units should Sandoval include in its year-end inventory?

The inventory turnover ratio is calculated as:

When costs to purchase inventory regularly decline,which method of inventory costing will yield the lowest gross profit and income?

A company made the following purchases during the year: On December 31,there were 28 units in ending inventory.These 28 units consisted of 2 from the January 10 purchase,3 from the March 15 purchase,4 from the April 25 purchase,11 from the July 30 purchase,and 8 from the October 10 purchase.Using specific identification,calculate the cost of the ending inventory.

All of the following statements regarding U.S.GAAP and IFRS are true except:

A company had the following ending inventory costs: Required: Calculate the lower of cost or market (LCM)value for each individual item.

Marquis Company uses a weighted-average perpetual inventory system. What is the amount of the cost of goods sold for this sale?

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements.The following information is available: Beginning inventory,January 1: $4,000 Net sales: $80,000 Net purchases: $78,000 The company's gross margin ratio is 25%.Using the gross profit method,the cost of goods sold would be:

On September 1 of the current year,Scots Company experienced a flood that destroyed the company's entire inventory.Because the company had not completed its month end reporting for August,it must estimate the amount of inventory lost using the gross profit method.At the beginning of August,the company reported beginning inventory of $215,450.Inventory purchased during August was $192,530.Sales for the month of August were $542,500.Assuming the company's typical gross profit ratio is 40%,estimate the amount of inventory destroyed in the flood.

Regardless of the inventory costing system used,cost of goods available for sale must be allocated at the end of the period between

Calculate the ending inventory using FIFO for a company that uses a perpetual inventory system,using the information given below.

A company's inventory records report the following in November of the current year: On November 8,it sold 18 units for $54 each.Using the LIFO perpetual inventory method,what amount of gross profit was earned from the 18 units sold?

The inventory turnover ratio:

A company had inventory on November 1 of 5 units at a cost of $20 each.On November 2,they purchased 10 units at $22 each.On November 6 they purchased 6 units at $25 each.On November 8,8 units were sold for $55 each.Using the LIFO perpetual inventory method,what was the value of the inventory on November 8 after the sale?

A company had the following purchases during the current year: On December 31,there were 26 units remaining in ending inventory.Using the FIFO inventory valuation method,what is the cost of the ending inventory?

Starlight Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the LIFO perpetual inventory method,what amount will be reported in cost of goods sold for the 11 units that were sold?

The _____________________ method of assigning costs to inventory and cost of goods sold assumes that the inventory items are sold in the order acquired.

A company has beginning inventory of 15 units at a cost of $12 each on October 1.On October 5,it purchases 10 units at $13 per unit.On October 12 it purchases 20 units at $14 per unit.On October 15,it sells 30 units.Using the FIFO periodic inventory method,what is the value of the inventory at October 15 after the sale?