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Exam 7: Inventories

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Question 41

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Determine the total value of the merchandise using Net Realizable Value:

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

E) A) and C)
F) B) and C)

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Question 42

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Using the lower of cost or market, what should the total inventory value be for the following items: Apply the lower-of-cost-or-market method to inventory as a whole.

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Question 43

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All of the following are reasons to use an estimated method of costing inventory except:

When merchandise inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be as follows:

If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the

A purchase order establishes an initial record of the receipt of the inventory.

Kristin's Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory?

Match the following cost flow assumption to their inventory costing method:

Use the following information 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. Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.

Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $45,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory cost at retail to be $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

The units of an item available for sale during the year were as follows: There are 30 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using FIFO.

If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is

The following data regarding purchases and sales of a commodity were taken from the related perpetual inventory account:

Use the following information 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. Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.

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

Which of the following is used to analyze the efficiency and effectiveness of inventory management?

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.

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?

The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year. What is the amount of the inventory at the end of the year using the LIFO method?