In a perpetual inventory system, if merchandise is returned to a supplier:
C) inventory is credited
The Hamlet Company uses the periodic inventory system. Information for 2009 is as follows:
Sales$2,650,000
Beginning inventory 680,000
Purchases 1,200,000
Purchase returns 12,000
Ending inventory 740,000
Symington Corporation uses the periodic inventory system. At December 31, 2009, the end of the company's fiscal year, a physical count of inventory revealed an ending inventory balance of $320,000. The following items were not included in the physical count:
Goods held on consignment at Murphy Corporation$23,000
Merchandise shipped to a customer on 12/30 f.o.b. destination
(merchandise arrived at customer's location on 1/3/10) 12,000
Merchandise shipped to a customer on 12/29 f.o.b. shipping
point (merchandise arrived at customer's location on 1/2/10) 6,000
Merchandise purchased from a supplier, shipped f.o.b.
destination on 12/29, in transit at year-end 24,000
Symington's 2009 ending inventory should be:
C) $355,000
* $320,000 (ending balance) + $12,000 (f.o.b. destination shipment made 12/30) + $23,000 (goods held on consignment).
By the gross method of accounting for purchase discounts, a discount not taken is recorded as:
A) Purchases
By the net method of accounting for purchase discounts, a discount not taken is recorded as:
B) interest expense
Identify the statement below concerning the LIFO inventory method that is untrue. a) In the absence of changes in costs, the results of using LIFO would be identical to those obtained by FIFO
b) LIFO will provide a close matching of current revenues with current costs since the most recent costs are expensed first
c) The ending inventory under LIFO will tend to approximate with current costs since the most recent costs are expensed first
c) The ending inventory under LIFO will tend to approximate replacement costs
d) In periods of declining costs, cost of goods sold using LIFO will produce a lower cost of goods sold than FIFO
c) the ending inventory under LIFO will tend to approximate replacement costs
Sanfillipo, Inc. had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the March were as follows:
DatePurchasesSales
March 8600 units
15400 units @ $22 each
22400 units @ $24 each
27400 units
Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.
The cost of inventory at the end of March applying the FIFO method is:
C) $14,000
* 400 units @ $24 each + 200 units @ $22 each
Sanfillipo, Inc. had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the March were as follows:
DatePurchasesSales
March 8600 units 15400 units @ $22 each
22400 units @ $24 each
27400 units
Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.The cost of inventory at the end of March applying the LIFO method is:
B) $12,000
* 600 units @ $20 each
Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the month of March were as follows:
DatePurchasesSales
march 8600 units
March 15400 units @ $22 each March 22400 Units @ $24 each
March 27 400 units
Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.
The cost of inventory at the end of March applying the average cost method is:
A) $12,900
* average cost of purchases = $21.50 each [(8000 x $20) + (400 x $22) + (400 x $24)] / 1600. Ending inventory = 600 units @ $21.50
Sanfillipo., Inco., had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the month of march were as follows:
DatePurchasesSales
march 8600 units
march 15400 units @ $22 each march 22400 units @ $24 each
March 27400 units
Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March
If Sanfillipo instead used the perpetual inventory system, cost of goods sold for the month of March applying the LIFO inventory method would be:
B) $21,600
* (600 units @ $20 each)+ (400 units @ $24 each)
In a period of declining costs, the use of which of the following inventory cost methods would result in the highest ending inventory?
C) LIFO
* the later, lower costs would be matched against revenue, leaving the higher, earlier costs in inventory
LIFO liquidation profits occurs when:
A) costs are rising and inventory quantity declines
For its 2009 fiscal year, the Kind Pharmaceutical Company reported sales of $10,500,000 cost of goods sold of $6,300,000, and net income of $525,000. The Company's gross profit ratio for the year is:
B) 40%
*($10,500,000 - $6,300,000) \ $10,500,000
On December 31, 2009, the Charlie Company adopted the dollar-value LIFO inventory method. Inventory at the end of 2009 for its only inventory pool was $500,000 under the dollar-value LIFO method. At the end of 2010 inventory at year-end cost is $672,000 and the cost index is 1.05. Inventory at the end of 2010 at dollar-value LIFO cost is:
D) $647,000
* end-of-2010 inventory at and-of-2009 year cost = $640,000 ($672,000 / 1.05). The increase in the end-of-2009 inventory at end-of-2009 dollars is $140,000. Adjusting this to end-of-2010 cost is $147,000 ($140,000 x 1.05) and adding this to the beginning inventory gives $647,000
J.T. Rider and Sons uses the dollar-value LIFO inventory method. At the end of 2010 the cost index is 1.25 and the ending inventory at base year cost is $360,000. If 2010 beginning inventory at base year cost was $300,000, 2010 ending inventory at dollar-value LIFO cost is:
C) $375,000
*$300,000 / [($360,000 - $300,000) x 1.25]
Ending inventory is equal to the cost of items on hand plus:
C) items in transit sold f.o.b. destination
Under the net method, purchase discounts lost are:
C) included in interest expense
In a period when prices are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:
B) FIFO
The LIFO conformity Rule states that if LIFO is used for:
A) Tax purposes, it must be used for financial reporting
The use of LIFO during a long inflationary period can result in:
C) Significant cash flow advantages over FIFO
Inventory does not include
D) Equipment used in the manufacturing of assets for sale.
Inventory records for Cyclops Herbicide revealed the following:
Purchases: Sales:
Mar 10 600 gals @ $7.25 Mar 5 400 gals
Mar 16 800 gals @ $7.30 mar 14 700 gals
mar 23 600 gals @ $7.35 mar 20 500 gals
mar 26 800 gals
7. Ending Inventory assuming LIFO in a period inventory system would be:
D) $4,320
Inventory records for Cyclops Herbicide revealed the following:
March 1, 2003, inventory - 1,000 gallons @ $7.20 = $7,200
Purchases: Sales:
Mar 10 600 gals @ $7.25 Mar 5 400 gals
Mar 16 800 gals @ $7.30 mar 14 700 gals
mar 23 600 gals @ $7.35 mar 20 500 gals mar 26 800 gals
8. The ending inventory assuming FIFO is:
D) $4,410
Inventory records for Cyclops Herbicide revealed the following:
Purchases: Sales:
Mar 10 600 gals @ $7.25 Mar 5 400 gals
Mar 16 800 gals @ $7.30 mar 14 700 gals
mar 23 600 gals @ $7.35 mar 20 500 gals mar 26 800 gals
9. The ending inventory under a periodic inventory system assuming average cost is:
C) $4,362
On January 1, 2009, Badger Inc., adopted the dollar-value LIFO method. The inventory cost on this date as $100,000. The 2009 ending inventory, valued at year-end costs, was $126,000. The relative costs index for this inventory in 2009 was 1.05
What inventory balance should Badger report on its 12/31/09 balance sheet?
A) $121,000
On January 1, 2009, Badger Inc., adopted the dollar-value LIFO method. The inventory cost on this date as $100,000. The 2009 ending inventory, valued at year-end costs, was $126,000. The relative costs index for this inventory in 2009 was 1.05
Suppose the Badger's 2010 ending inventory, valued at year0end costs, was $143,000 and that the relative cost index for this inventory in 2010 was 1.10. In determining the inventory balance should Badger report in its 12/31/10 balance sheet:
A) An additional layer of $11,000 is added to the 1/1/10 balance
On January 1, 2009, Badger Inc., adopted the dollar-value LIFO method. The inventory cost on this date as $100,000. The 2009 ending inventory, valued at year-end costs, was $126,000. The relative costs index for this inventory in 2009 was 1.05
Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would badger report on its 12/31/11 balance sheet?
