Accounting Chapter 5

A company has beginning inventory of $20,000, purchases of $15,000, and ending inventory of $2,500. The cost of goods available for sale is ___.

$35,000 20,000 + 15,000 = 35,000 Beginning Inventory + Net Purchases = Merchandise Available for sale ALSO Ending Inventory + Cost of Goods Sold = Merchandise Available for sale

Assume that we use a perpetual inventory system and that five identical units are purchased at the following dates and costs: April 5 $10 April 10 $12 April 15 $14 April 20 $16 April 22 $17 One unit is sold on April 25. The company uses the last-in, first-out (LIFO) inventory costing method. Cost of the ending inventory

$52 Add all of them BUT the last one

Assume that we use a perpetual inventory system and that five identical units are purchased at the following dates and costs: April 5 $10 April 10 $12 April 15 $14 April 20 $16 April 22 $17 One unit is sold on April 25. The company uses the weighted average inventory costing method. Cost of the ending inventory

$55.2 ADD all of the numbers than divide them by however many their are (5) than multiply it by however many units there are (4)

Assume that we use a perpetual inventory system and that five identical units are purchased at the following dates and costs: April 5 $10 April 10 $12 April 15 $14 April 20 $16 April 22 $17 One unit is sold on April 25. The company uses the first-in, first-out (FIFO) inventory costing method. Cost of the ending inventory:

$59 Add all of them BUT the first one

Intercontinental, Inc., uses a perpetual inventory system. Consider the following information about its inventory: July 1, purchased 10 units for $910 or $91 per unit; July 3, purchased 15 units for $1,590 or $106 per unit; July 14, sold 20 units; July 17, purchased 20 units for $2,300 or $115 per unit; July 28, purchased 10 units for $1,190 or $119 per unit; July 31, sold 23 units. Using LIFO, the cost of goods sold for the sale of 23 units on July 31 is ____ and the inventory balance at July 31 is _____.

2) LIFO Cost of goods sold = (10*119+13*115) = 2685 Ending inventory = (7*115+5*91) = 1260

Intercontinental, Inc., uses a perpetual inventory system. Consider the following information about its inventory: July 1, purchased 10 units for $910 or $91 per unit; July 3, purchased 15 units for $1,590 or $106 per unit; July 14, sold 20 units; July 17, purchased 20 units for $2,300 or $115 per unit; July 28, purchased 10 units for $1,190 or $119 per unit; July 31, sold 23 units. Using weighted average, the cost of goods sold for the sale of 23 units on July 31 is ____ and the inventory balance at July 31 is _____.

3) Weighted average Cost of goods sold = 3990/35*23 = 2622 Ending inventory = 1368

Intercontinental, Inc., uses a perpetual inventory system. Consider the following information about its inventory: July 1, purchased 10 units for $910 or $91 per unit; July 3, purchased 15 units for $1,590 or $106 per unit; July 14, sold 20 units; July 17, purchased 20 units for $2,300 or $115 per unit; July 28, purchased 10 units for $1,190 or $119 per unit; July 31, sold 23 units. Using FIFO, the cost of goods sold for the sale of 23 units on July 31 is ____ and the inventory balance at July 31 is _____.

Cost of goods sold $2,600 Inventory balance $1,420 1) FIFO Cost of goods sold = (5*106+18*115) = 2600 Ending inventory = (2*115+1190) = 1420

A company uses a periodic inventory system. On August 1, the company had 6 items of beginning inventory with a cost of $7 per unit. On August 3, the company purchased 16 units at $14 per unit. Then, on August 5, the company sold 12 units. The 12 units sold consisted of 7 units from the August 3rd purchase and 5 units from the August 1st beginning inventory. Using specific identification, the cost of the 12 units sold is _____.

Cost of goods sold= $133 Cost of goods sold= 7*14 + 5*7= $133

A company reports merchandise inventory on December 31 at $250,000 but LCM applied to items is $200,000.

Debit Cost of Goods Sold 50,000 Credit Merchandise Inventory 50,000

Damaged inventory that cannot be resold

Exclude from inventory

Goods in transit shipped by Abbey (seller) FOB Shipping Point

Exclude from inventory

Goods in transit shipped to Abbey (purchaser) FOB Destination

Exclude from inventory

Goods term-8on consignment (Abbey is consignee)

Exclude from inventory

Goods in transit shipped by Abbey (seller) FOB Destination

Include in inventory

Goods in transit shipped to Abbey (purchaser) FOB Shipping Point

Include in inventory

Goods on consignment (Abbey is consignor)

Include in inventory

Obsolete inventory that can be sold

Include in inventory

If a perpetual inventory system is in use _____.

a physical inventory count should be taken at least annually.

If all units are purchased at the same unit cost, cost of goods sold will ____?

be the same for all four methods

Merchandise inventory includes all of the following except: Goods held for sale Goods located in the warehouse Goods sold Goods located in an off-site warehouse

goods sold

An item was shipped from a supplier under FOB shipping point. The invoice in the amount of $2,000 included payment terms of 2/10, n/30. When the invoice was paid, a purchase discount in the amount of $40 was taken. Other details relating to the purchase of this item included the following: shipping charges of $300, storage fees of $50, and insurance premium of $100. The cost of this inventory item is

invoice amount 2,000 less: discount (40) add: freight charges 300 import duties 50 insurance premium 100 cost of inventory item $2,410

Market value is replacement cost for LIFO, but net ___ value is used for FIFO, Specific Identification and Weighted Average methods.

realizable

consignor

the owner of the goods

consignee

the seller of the goods