ACCT 210 Chpt.6

All purchase/sale transactions are made on credit. The company uses the FIFO method and perpetual inventory system to record transactions. What is the amount of LIFO adjustment needed to adjust FIFO inventory records reported for the year to LIFO for external reporting purposes?

$1,300

Travis Corporation begins the year with $50,000 of tire inventory. The company purchases tires worth $150,000 during the year. At the end of the year, the purchase cost of remaining inventory is $30,000. What is the cost of goods sold?

$170,000

The inventory transactions of Green Products Inc.are shown below. Jan. 1-Beginning inventory-500 $5 May 15-Purchase-1,000 $6 Jun. 10-Purchase-500 $7 Oct.25-Purchase-2,000 $8 Units sold during the year: 3,000 What is the amount of cost of goods sold that Green Products will report in its income statement for the current year, if it uses the first-in, first-out cost method?

$20,000

What is the amount of cost of goods sold that Green Products will report in its income statement for the current year, if it uses the last-in, first-out cost method?

$22,500

All purchase/sale transactions are made on credit. The company uses the FIFO method and perpetual inventory system to record transactions. What is the ending balance of Inventory under the FIFO method?

$4,500

Dane Stores begins the year with $30,000 of DVD inventory. It purchases DVDs worth $80,000 during the year. The cost of goods sold for the year is $70,000. What is the amount of ending inventory?

$40,000

Trivia Company reports a gross profit of $100, income tax expense of $15, selling, general, and administrative expenses of $35, nonoperating revenues of $10, and nonoperating expenses of $15. What is the company's operating income?

$65

Units sold during the year: 3,000 What is the amount of ending inventory that Green Products will report in its balance sheet at the end of the year, if it uses the first-in, first-out cost method?

$8,000

All purchase/sale transactions are made on credit. The company uses the FIFO method and perpetual inventory system to record transactions. The entry to record the transaction on December 10 will involve a debit to Cost of Goods Sold for _____.

$9,800

By mistake, the accountant at Talisman recorded $15,000 as ending inventory for Year 1. What will be the amount of gross profit reported in Year 2 because of the error?

$14,000

A company has total sales revenue of $500,000 for the year. Sales discounts, returns, and allowances total $50,000 and the cost of goods sold is $300,000. What is the company's gross profit ratio?

33.33%

All purchase/sale transactions are made on credit. The company uses the FIFO method and perpetual inventory system to record transactions. Which of the following will be recorded on May 21?

Credit to Accounts Payable for $4,800

A supplier offers a company terms 3/10, n/30 for a $10,000 purchase on account on January 1. The company uses a perpetual inventory system to record transactions. If the company makes the payment on January 10, the entry to record the payment will include a:

Credit to Inventory for $300

All purchase/sale transactions are made on credit. The company uses the FIFO method and perpetual inventory system to record transactions. Which of the following will be recorded on February 25?

Credit to Sales Revenue for $6,000

Which of the following is an example of a nonoperating expense for a merchandising company?

Interest expense

All of the following accounts will be affected when a company makes a payment within the discount period under a periodic system, except _____.

Inventory

Which of the following is true of a period of falling inventory costs?

LIFO will report higher gross profit than FIFO.

Under the periodic system, freight charges are _____.

recorded in an account called Freight-in

Walmart is an example of a:

retailer

When inventory costs are rising, the _____ results in a higher reported inventory.

FIFO method

By mistake, the accountant at Talisman recorded $15,000 as ending inventory for Year 1. Which of the following is true of the total amount reported for cost of goods sold over the two-year period from Year 1 to Year 2 because of the error?

Unaffected at $111,000

A _____________ inventory system is one that is continually updated to reflect inventory purchases and sales.

perpetual

Products that have been started in the production process but are not yet complete at the end of the period are known as:

work-in-process inventory

For the current year, Theta Corporation has beginning and ending inventories of $40,000 and $60,000, respectively. Cost of goods sold for the year is $240,000. What is the company's inventory turnover ratio?

4.8 times

For the current year, Delta Corporation has beginning and ending inventories of $80,000 and $100,000, respectively. Cost of goods sold for the year is $450,000. What is the company's average days in inventory?

73 days

A company that returns items that were previously purchased on account will debit:

Accounts Payable

Which of the following is true of a sale on account using a periodic inventory system?

No entry is required for inventory reduction.

The sales revenue and correct inventory information for Talisman Corporation is provided below. Year 1 Year 2 Sales revenue [$75,000] [$80,000] Beginning inventory [10,000] [12,000] Purchases [50,000] [60,000] Ending inventory [12,000] [9,000] By mistake, the accountant at Talisman recorded $15,000 as ending inventory for Year 1. What happens to gross profit reported for Year 1 because of this error?

Overstated by $3,000

Which of the following steps in the flow of inventory costs for a manufacturing company occurs first?

Purchasing raw materials

Which of the following is an advantage of using LIFO in a period of rising costs?

Results in lower taxes

The LIFO conformity rule requires that _____.

a company that uses LIFO for tax reporting to also use LIFO for financial reporting

Inventory is typically reported as a(n):

asset on the balance sheet

Accountants often call FIFO the balance-sheet approach because _____.

the amount it reports for ending inventory better approximates the current cost of inventory

The weighted-average method assumes that:

the cost of goods sold consists of a random mixture of all goods available for sale.

The FIFO method assumes that:

the first units purchased are the first ones sold.

The LIFO method assumes that:

the last units purchased are the first ones sold.

Inventory is reported on the balance sheet at:

the lower of original cost and net realizable value