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Exam 9: Inventory and Cost of Goods Sold

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Question 41

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Venus Inc. carries Product A in inventory on December 31 at its unit cost of $22.50. Because of a sharp decline in demand for the product, the selling price is reduced to $24.00 per unit. Venus's normal profit margin on Product A is $4.80, disposal costs are $3.00 per unit, and the replacement cost is $15.90. Under the rule of lower of cost or market, Venus's December 31 inventory of Product A should be valued at a unit cost of

A) $15.90.
B) $16.20.
C) $21.00.
D) $22.50.

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Question 42

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Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below: See information for Miller Inc. above. If Miller Inc. uses a FIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

A) $150,080.
B) $150,160.
C) $152,232.
D) $152,960.

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Question 43

Multiple Choice

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Following are the account balances from Jackson Company's income statement: Given this information, the cost of merchandise available for sale during 2011 is

Purchases and sales during a recent period for Coleman, Inc. were: Beginning inventory was 100 units at $1 each. See information for Coleman, Inc.above. Given this information, what is the ending inventory if the periodic LIFO costing alternative is used?

From the following information, determine the amount of freight-in.

Hardy Company is a wholesale electronics distributor. On December 31, 2011, it prepared the following partial income statement: $\begin{array}{lr}\text { Grosss sales.}&\$600,400\\\text { Sales discounts}&400\\\text {Net sales }&\$600,000\\\text {Cost of goods sold: }&\\\text {Beginning inventary . }&\$200,000\\\text { Net purchases}&300,000\\\end{array}$ Given this information, if Hardy Company's gross margin is 30 percent of net sales, what is the correct ending inventory balance?

An overstatement of ending inventory in Period 1 would result in income of Period 2 being

Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below: See information for Miller Inc. above. If Miller Inc. uses a LIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

Cost of goods sold is equal to

The following information is available from Preston Company's 2011 accounting records: Preston's 2011 cost of goods sold is

The gross profit method of inventory valuation is not valid when

Which of the following would not be reported as inventory?

Miller Company needs an estimate of its ending inventory balance. The following information is available: $\begin{array}{ll}&\text { Cost } & \text { Retail } \\\text {Sales revenue }&\\\text {Beginning inventory }&\$ 35,000 & \$ 180,000 \\\text {Net purchases }&100,000 & 62,000 \\\text {Grosssmargin percentage }&30 \% & 135,000\end{array}$ Given this information, when using the gross margin estimation method, ending inventory is approximately

Goods in transit at year-end purchased FOB shipping point were appropriately recorded in the purchases account but were incorrectly excluded from the ending inventory. What effect will this omission have on the company's assets, liabilities, and retained earnings at year-end?

Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

When the current year's ending inventory amount is overstated, the

Selected information from the accounting records of Thayer Company is as follows: Thayer's inventory turnover for 2011 is

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to

The following information is available for Lyman Company: Assuming that a business year consists of 360 days, the number of days' sales in average inventories for 2011 was

Boston Company reported the following net income amounts: In 2012, the company discovered errors that had been made in computing the ending inventories for 2009 and 2010, as follows: Compute the correct net incomes for (1) 2009, (2) 2010, and (3) 2011.