MBA 700 Homework 3

A

Ace Bonding Company purchased inventory on account. The inventory costs 2,000 and is expected to sell for 3,000. How should Ace record the purchase using a perpetual inventory system?

decrease total assets and net income

At the end of a reporting period, Gamble Corp determines that its ending inventory has a cost of 300,000 and a net realizable value of 230,000. What would be the effects of the adjustment to write down inventory to net realizable value?

2906

At what amount should OldWest report its inventory? _____

20000

Beginning inventory is 30,000. Purchases during the year are $50000. Cost of goods sold is $60000. What is the ending inventory?

beginning inventory, net purchases, ending inventory

Cost of goods sold = ___ + ____ - ____

expense, income statement

Cost of goods sold is an ____ account showing on the ____

B

Davis Hardware Company uses a perpetual inventory system. How should Davis record the sale of inventory costing $620 for $960 on account?

1700

Dubar sold 700 units of inventory on Apr 30. COGS assuming FIFO would be ___

480

Dunar sold 700 units of inventory on April 30th. Ending inventory assuming LIFO would be ___

greater under FIFO than LIFO

During the period when inventory costs are rising, ending inventory will most likely be:

780000

Eric Company has the following information: Total revenues 860,000 Sales returns and allowances 50000 Sales discounts. 30000 Ending inventory 10000 What is the amount of net revenues for Eric Company? ___

150, 30, 170, 10

FIFO COGS ____ FIFO Ending Inventory ___ LIFO COGS ____ LIFO Ending Inventory ___

accounts receivable, sales allowances

Gershwin Wallcovering Inc. shipped the wrong color of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this transaction by crediting ___ and debiting ___

net sales, cost of goods sold

Gross profit is calculated as ____ *MINUS* ____

C

On April 1, Robert LLC purchased two units of inventory, A and B. The cost of unit A was $650 and the cost of unit B was $625. On April 30, Robert LLC had not sold the inventory. The net realizable value of unit A was now $685 while the net realizable value (market value) of unit B was $550. The adjustment associated with the lower of cost and net realizable value on April 30 will be

C

On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with terms 2/10, n/30. On May 8, Ace pays for this inventory and records which of the following using a perpetual inventory system?

C

Oswego Clay Pipe Company provides services of $45,000 to Southeast Water District #45 on April 45 of the current year with terms 1/15, n/60. What would Oswego record on April 23, assuming the customer made the correct payment on that date?

cost of goods sold, inventory

The inventory that a company sold during a period is shown in its financial statements as ___ and the inventory that a company still has on hand at the end of the year is shown in the financial statements as ___

exceeds, benefits

The lower of cost and market (net realizable value) method for inventory was developed to: Avoid reporting inventory at an amount that ___ the ___ it provides

continual, end

The primary difference between the periodic and perpetual inventory system is: The perpetual system maintains a ___ record of inventory transactions, whereas the periodic system records these transactions only at the ___ of the period

sales returns, accounts receivable

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would debit ___ and credit ____

FIFO

Which inventory cost flow assumption results in a highest reported amount for COGS when inventory costs are falling?

revenue, allowances, discounts, returns

net revenue = ____ *MINUS* ____