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Exam 6: Inventories

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Question 1

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Determine the total value of the merchandise using Net Realizable Value: $\begin{array} { | l | l | l | l | } \hline \text { Item } & \text { Quantity } & \text { Selling Price } & \text { Commission } \\\hline \text { Doll } & 10 & \$ 7 & \$ 2 \\\hline \text { Horse } & 5 & 9 & 3 \\\hline\end{array}$

A) $35
B) $80
C) $115
D) $25

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Question 2

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Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.

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Question 3

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If the perpetual inventory system is used, the account entitled Merchandise Inventory is debited for purchases of merchandise.

Beginning inventory, purchases and sales data for widgets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO.

Inventory controls start when the merchandise is shelved in the store area.

When merchandise sold is assumed to be in the order in which the purchases were made, the company is using

The method of computing inventory that uses records of the selling prices of the merchandise is called

Based upon the following data estimate the cost of ending merchandise inventory:

A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are in the possession of the consignor.

The following units of a particular item were available for sale during the year: The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

One negative effect of carrying too much inventory is risk that customers will change their buying habits.

Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.

The two most widely used methods for determining the cost of inventory are

Beginning inventory, purchases and sales data for T-shirts are as follows: Assuming the business maintains a periodic inventory system, calculate the cost of merchandise sold and ending inventory under the following assumptions: a. FIFO b. LIFO c. Average cost (round cost of merchandise sold and ending inventory to the nearest dollar)

Generally, the lower the number of days' sales in inventory, the better.

Describe three inventory cost flow assumptions and how they impact the financial statements.

The units of Manganese Plus available for sale during the year were as follows: There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the inventory cost by (a) FIFO, (b) LIFO, and (c) average cost methods.

The beginning inventory and purchases of an item for the period were as follows: The company uses the periodic system, and there were 15 units in the inventory at the end of the period. Determine the cost of the 15 units in the inventory by each of the following methods, presenting details of your computations: (a) first-in, first-out; (b) last-in, first-out; (c) average cost. Do not round your intermediate calculations. Round your final answer to two decimal places.

The inventory data for an item for November are: $\begin{array}{rll}\text { Nov. } 1 & \text { Inventory } & 20 \text { units at } \$ 19 \\4 & \text { Sold } & 10 \text { units } \\10 & \text { Purchased } & 30 \text { units at } \$ 20 \\17 & \text { Sold } & 20 \text { units } \\30 & \text { Purchased } & 10 \text { units at } \$ 21\end{array}$ Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

Beginning inventory, purchases and sales data for tennis rackets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.