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Exam 5: Reporting and Analyzing Inventories

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Question 31

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The costs of goods purchased will vary under the different inventory methods of specific identification,FIFO,LIFO,and weighted average.

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Question 32

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A company has inventory with a selling price of $451,000,a market value of $223,000 and a cost of $241,000.According to the lower of cost or market,the inventory should be written down to $223,000.

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Question 33

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A company's inventory records indicate the following data for the month of April: If the company uses the first-in,first-out (FIFO)method and the perpetual inventory system,what would be the cost of the ending inventory?

A company's cost of inventory was $219,500.Due to phenomenal demand the market value of its inventory increased to $221,700.This company should record the inventory at its market value.

A company's warehouse contents were destroyed by a flood on September 12.The following information was the only information that was salvaged: 1.Inventory,beginning: $28,000 2.Purchases for the period: $17,000 3.Sales for the period: $55,000 4.Sales returns for the period: $700 The company's average gross profit ratio is 35%.What is the estimated cost of the lost inventory?

An advantage of the ________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

Net realizable value for damaged or obsolete goods is sales price less the cost of making the sale.

The ________ method of assigning costs to inventory and cost of goods sold exactly matches the costs of particular items with the revenues they generate and would be used when items can be easily traced to the purchase invoice cost.

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.Using the Periodic LIFO inventory valuation method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)

Grays Company has inventory of 10 units at a cost of $10 each on August 1.On August 3,it purchased 20 units at $12 each.12 units are sold on August 6.Using the perpetual FIFO inventory method,what amount will be reported as cost of goods sold for the 12 units that were sold?

McCarthy 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 perpetual FIFO inventory method,what is the value of inventory after the October 4 sale?

A company's inventory records indicate the following data for the month of April: If the company uses the first-in,first-out (FIFO)method and the perpetual inventory system,what is the amount of cost of goods sold for April?

It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.

Raleigh Co.has the following products in its ending inventory.Compute the lower of cost or market total for inventory applied separately to each product.

The days' sales in inventory ratio is computed by dividing ending inventory by cost of goods sold and multiplying the result by 365.

FIFO is preferred when purchase costs are rising and managers have incentives to report higher income for reasons such as bonus plans,job security,and reputation.

The assignment of costs to the cost of goods sold and to ending inventory using FIFO is the same for both the perpetual and periodic inventory systems.

Strods Company reported the following purchases and sales of its only product.Strods uses a perpetual inventory system.Determine the cost assigned to the ending inventory using FIFO.

A company's inventory records report the following in November of the current year: On November 8,it sold 12 units for $54 each.Using the perpetual LIFO inventory method,what amount of gross profit was earned from the 12 units sold?

The full disclosure principle requires that the notes to the financial statements report any change in the method of accounting for inventory.