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Exam 6: Inventories

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Question 51

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1. Explain the effect of the following on the financial statements: Goods held on consignment were included in the ending inventory count. Goods purchased FOB shipping point were in transit on the last day of the year. The goods were not counted as part of ending inventory. Goods sold FOB shipping point were in transit on the last day of the year. These goods were not counted as part of ending inventory. 2. What happens if inventory errors are not found and corrected?

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1. Goods held on consignment were includ...

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Question 52

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If Beginning Inventory BI) + Purchases P) - Ending Inventory EI) = Cost of Merchandise Sold COMS) , an equivalent equation can be written as

A) BI + P = COMS - EI
B) BI - P = COMS + EI
C) BI + P = COMS + EI
D) EI + P = COMS - BI

E) None of the above
F) A) and D)

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Question 53

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All of the following are documents used for inventory control except

Determine the total value of the merchandise using net realizable value.

Assume that three identical units of merchandise were purchased during October, as follows: $\begin{array} { | l | l | l | l | l | } \hline & & & \text { Units } & \text { Cost } \\\hline \text { October } & 5 & \text { Purchase } & 1 & \$ 5 \\\hline & 12 & \text { Purchase } & 1 & 13 \\\hline & 28 & \text { Purchase } & 1 & 15 \\\hline \text { Total } & & & \underline { 3 } & \$ 33 \\\hline\end{array}$ Assume one unit is sold on October 31 for $28. Determine cost of merchandise sold, gross profit, and ending inventory under the average cost method.

Beginning inventory, purchases, and sales data for hammers are as follows: Assuming the business maintains a perpetual inventory system, complete the inventory cards and calculate the cost of merchandise sold and ending inventory under the following assumptions: a) First-in, first-out b) Last-in, first-out

When using the FIFO inventory costing method, the most recent costs are assigned to the cost of merchandise sold.

A physical inventory should be taken at the end of every month.

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

Applying the lower of cost or market to each item of inventory, what should the total inventory value be for the following items?

When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:

Which document authorizes the purchase of the inventory from an approved vendor?

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Control of inventory should begin as soon as the inventory is received. Which of the following internal control steps is not done to meet this goal?

The lower of cost or market is a method of inventory valuation.

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 difference in gross profit between the LIFO and FIFO inventory cost systems.

Use the information below to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. $\begin{array} { | l | l | l | l | } \hline \text { Date } & { \text { Blankets } } & \text { Units } & \text { Cost } \\\hline { \text { May } 3 } & \text { Purchase } & 5 & \$ 20 \\\hline 10 & \text { Sale } & 3 & \\\hline 17 & \text { Purchase } & 10 & \$ 24 \\\hline 20 & \text { Sale } & 6 & \\\hline 23 & \text { Sale } & 3 & \\\hline 30 & \text { Purchase } & 10 & \$ 30 \\\hline\end{array}$ -Assuming that the company uses the perpetual inventory system, determine the ending inventory for the month of May using the LIFO inventory cost method.

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data?

The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year rounded to nearest dollar according to the average cost method?