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Exam 6: Inventories and Cost of Sales

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Question 71

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________ is the estimated sales price of damaged goods minus the cost of making the sale.

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Net realiz...

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Question 72

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Mary's Antiques does not have its own retail location, instead maintains inventory in its warehouse and sells merchandise through Oldtime Antique Mall. Oldtime does not assume responsibility for goods until they are sold to customers at which time it takes a commission for items sold and sends the sale proceeds to Mary's. Identify which company has the role of the consignor and the consignee. Which company should include any unsold goods as part of its inventory?

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Mary's Antiques is the consign...

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Question 73

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Use the information below to determine the sales revenue, cost of goods sold and gross profit that would be reported for the company related to the March 16 sale assuming the company uses FIFO inventory valuation and a perpetual inventory system. $\begin{array} { | l | l | } \hline \text { January 1: } & \text { Purchased } 100 \text { units at \$10 per unit. } \\\hline \text { February 5: } & \text { Purchased } 60 \text { units at \$12 per unit. } \\\hline \text { March 16: } & \text { Sold } 40 \text { units for \$16 per unit. } \\\hline\end{array}$

A company had the following purchases during its first year of operations: $\begin{array} { | l | l | } \hline & \text { Purchases } \\\hline \text { January. } & 10 \text { units at \$120 } \\\hline \text { February. } & 20 \text { units at \$130 } \\\hline \text { May. } & 15 \text { units at \$140 } \\\hline \text { September: } & 12 \text { units at \$150 } \\\hline \text { November: } & 10 \text { units at \$160 } \\\hline\end{array}$ On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?

When applying the lower of cost or market method of inventory valuation, market is defined as the ________.

The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the:

A company has beginning inventory of 10 units at a cost of $10 each on February 1. On February 3, it purchases 20 units at $12 each. 12 units are sold on February 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that are sold?

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available: Beginning inventory, January 1: $4,000 Net sales: $80,000 Net purchases: $78,000 The company's gross margin ratio is 25%. - Using the gross profit method, the estimated ending inventory value would be:

A company had the following purchases and sales during its first year of operations: $\begin{array} { | l | l | l | } \hline & \text { Purchases } & \text { Sales } \\\hline \text { January. } & 10 \text { units at \$120 } & 6 \text { units } \\\hline \text { February. } & 20 \text { units at \$125 } & 5 \text { units } \\\hline \text { May. } & 15 \text { units at \$130 } & 9 \text { units } \\\hline \text { September: } & 12 \text { units at \$135 } & 8 \text { units } \\\hline \text { November: } & 10 \text { units at \$140 } & 13 \text { units } \\\hline\end{array}$ On December 31, there were 26 units remaining in ending inventory. -Using the Periodic LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Regardless of what inventory method or system is used, cost of goods available for sale must be allocated between ________ and ________.

The FIFO inventory method assumes that costs for the latest units purchased are the first to be charged to the cost of goods sold.

Ulrich had cost of goods sold of $6.7 million, ending inventory of $2.2 million, and average inventory of $1.9 million. Its days' sales in inventory equals:

In the retail inventory method of inventory valuation, the retail amount of inventory refers to its dollar amount measured using selling prices of inventory items.

Consignment goods are:

On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $215,450. Inventory purchased during August was $192,530. Sales for the month of August were $542,500. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.

An understatement of ending inventory will cause an understatement of assets and equity on the balance sheet.

The ________ method of assigning costs to inventory and cost of goods sold assumes that the most recent purchases are sold first.

The Inventory account is a controlling account for the inventory subsidiary ledger that contains a separate record for each separate product.

Giorgio had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its inventory turnover equals:

Buffalo Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available: • ^{The ending inventory balance of $412,000 did not include goods costing $48,000 that were} purchased by Buffalo on December 28 and shipped FOB destination on that date. Buffalo did not receive the goods until January 2 of the following year. • ^{The ending inventory balance of $412,000 included damaged goods at their original cost of} $38,000. The net realizable value of the damaged goods was $10,000. Based on this information, the correct balance for ending inventory on December 31 is: