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Exam 6: Inventory

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Question 51

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Meranda Company reports the following inventory information: What is the total value of the merchandise under LCNRV (lower of cost or net realizable value)? Show all calculations.

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The value of the inventory at LCNRV is $...

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Question 52

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If a company has an inventory turnover rate of 4, how often is the company selling its inventory in months?

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The company sells it...

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Question 53

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What accounting principle would be followed when underestimating inventory?

If a company has not recorded a significant write off of inventory in the financial statements, which principle has been violated?

Making notes in the financial statements to explain the justification of valuation changes and other financial decisions would be an example of:

Net sales times the historical gross profit percentage yields the estimated:

Goods available for sale are $350,000; beginning inventory is $24,000; ending inventory is $32,000; and cost of goods sold is $275,000. The inventory turnover is __________.

Beginning inventory + Net purchases = ________.

Compare the effects of the different costing methods on the financial statements -When inventory prices are rising, what is the effect on Inventory, Cost of Goods Sold, and Net Income under the FIFO method?

Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.

One lot of merchandise was valued at $566.34. A second count of the same merchandise showed $566.82. The difference could be ignored due to which accounting principle?

If the replacement cost of inventory is less than its historical cost, the company will write down the inventory. What is the journal entry required?

A material amount of value is one large enough to cause someone to change a decision that has been made.

Cost of goods available for sale minus estimated cost of goods sold yields the estimated __________.

The inventory system that uses the merchandise inventory account as an active account is called:

Inventory is shown on the:

Knowledgeable decisions that are made by outsiders who read financial reports are a result of the concept of conservatism.

Goods such as milk, bread, and cheese would probably be costed using what method?

Journalize the following inventory transactions using the perpetual inventory method. April 17 Purchased $4,800 of inventory, on account, terms 2/10, n/30. April 22 Returned $750 of damaged merchandise to supplier. April 25 Paid balance due on inventory purchase of April 17.

Other than the cost of purchasing the inventory, another large cost of inventory would be storage of the inventory.