FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Accounting for Merchandise Inventory

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Essay

Review LaterAdd Note

Review Later

Table 6-5 Assume the following data for Kruger Sales for November 2019: $\begin{array}{llcc} \text {Beginning inventory Nov. 1 } & 5 \text { units at } \$ 90 \text { each } \\ \text {Sale Nov. 3 } &3 \text { units at } \$ 120 \text { each } \\ \text {Nov. 6 purchase } &11 \text { units at } \$ 95 \text { each }\\ \text { Sale Nov. 8} &4 \text { units at } \$ 120 \text { each }\\ \text { Sale Nov. 9 } & 3 \text { units at } \$ 120 \text { each }\\\end{array}$ On November 30, a physical count reveals 6 units on hand. -Refer to Table 6-5. Calculate gross margin for Kruger Sales assuming the perpetual moving-weighted-average-cost method is being used.

Correct Answer

verified

CPA Competency: 1.2.2 Evaluates treatme...

View Answer

Show Answer

Question 32

True/False

Review LaterAdd Note

Review Later

When the sales value of the inventory subsequently increases after a write down to net-realizable-value the reported value may be increased to the limit of the original cost.

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Piggly Wiggly Sales had six CD players in inventory on December 31. They were purchased in November for $170 each. A quoted price received from the supplier on December 31 shows the CD players now cost $175 each. Piggly Wiggly has marked each player to sell for $320. Using the lower-of-cost-and-net-realizable-value rule, the ending inventory of CD players should be shown at:

FIFO costing is consistent with the physical movement of inventory for many companies.

If the cost of an item of inventory is $80 and the current selling price is $75, the amount shown in inventory on the balance sheet under the lower-of-cost-and-net realizable-value rule is:

The following data are available for the month of April for Gore Company: $\text {April 1 inventory }$$\quad 120$ $\text {units at \$ 8.15 each}$ $\text {April 10 purchase}$ $\quad 200$ $\text {units at \$ 8.20 each}$ $\text {April 20 purchase}$ $\quad 410$$\text { units at \$ 8.40 each}$ $\text {April 25 purchase}$ $\quad 310$ $\text {units at \$ 8.50 each}$ Gore sold 630 units during April. Compute the value of ending inventory under FIFO. Assume a periodic inventory system.

Given the following data, what is cost of goods sold? $\begin{array} { | l | r | } \hline \text { Sales revenue } & \$ 950,000 \\\hline \text { Beginning inventory } & 150,000 \\\hline \text { Ending inventory } & 230,000 \\\hline \text { Purchases } & 720,000 \\\hline\end{array}$

The lower-of-cost-and-net-realizable-value rule is a good example of conservatism in accounting.

Given the following data, what is the cost of ending inventory rounded to the nearest whole dollar using periodic FIFO? $\begin{array} { | l | l | } \hline \text { Sales revenue } & 100 \text { units at } \$ 10 \text { per unit } \\\hline \text { Beginning inventory } & 50 \text { units at } \$ 8 \text { per unit } \\\hline \text { Purchases } & 90 \text { units at } \$ 9 \text { per unit } \\\hline\end{array}$

Two separate errors affected Satellite City in 2019. The beginning inventory was understated by $28,000 and the ending inventory was understated by $43,000. Net income in 2019 will be:

Which of the following inventory costing methods requires a company to keep track of the actual physical movement of individual inventory items?

All balance sheets have inventory listed as an asset.

Table 6-6 Sam's Wholesale Bikes $\begin{array} { | l | l | } \hline \text { January } 1 \text { inventory balance } & 15 \text { units at } \$ 350 \text { per unit } \\\hline \text { January } 4 \text { purchase } & 50 \text { units at } \$ 375 \text { per unit } \\\hline \text { January } 15 \text { sale } & 40 \text { units at } \$ 550 \text { per unit } \\\hline \text { February } 8 \text { purchase } & 80 \text { units at } \$ 405 \text { per unit } \\\hline \text { February } 15 \text { sale } & 70 \text { units at } \$ 550 \text { per unit } \\\hline\end{array}$ -Refer to Table 6-6. What is the cost of goods sold for the two months assuming that Sam's uses the periodic weighted-average inventory method?

Given the following data: $\begin{array} { | l | r | } \hline\text { Ending inventory at cost } & \$ 62,000 \\\hline \text { Ending inventory at net realizable value } & 61,000 \\\hline \begin{array} { c } \text { Cost of goods sold (before consideration of the } \\\text { lower-of-cost-and-net-realizable-value rule) }\end{array} & 104,000 \\\hline\end{array}$ Which of the following depicts the proper account balance after the application of the lower-of-cost-and-net realizable value rule?

The journal entry to sell merchandise under a periodic inventory system includes a:

The adjusting entry at year end under a perpetual inventory system to record cost of goods sold includes a:

The disclosure principle of accounting requires that a business reveal to the user of the financial statement the method used to value inventory.

Table 6-1 Assume the following data for Burnette Merchandising for 2019: $\begin{array} { | l | l | } \hline\text { Beginning inventory } & 10 \text { units at } \$ 7 \text { each } \\\hline \text { March } 18 \text { purchase } & 15 \text { units at } \$ 9 \text { each } \\\hline \text { June } 10 \text { purchase } & 20 \text { units at } \$ 10 \text { each } \\\hline \text { October } 30 \text { purchase } & 12 \text { units at } \$ 11 \text { each } \\\hline\end{array}$ On December 31, a physical count reveals 15 units in ending inventory. -Refer to Table 6-1. Assume a periodic inventory system. Under the weighted-average method, cost of goods sold on the income statement would be:

The lower-of-cost-and-net-realizable-value rule is an application of the consistency principle.

Inventory at the end of the current year is overstated by $20,000. What effect will this error have on the following year's net income?