Acc 231 Exam 2 Chapter 5

Merchandise inventory includes: -All goods on consignment. -All goods in transit. -Only damaged goods. -Only non-damaged goods. -All goods owned by a company and held for sale.

All goods owned by a company and held for sale.

The inventory valuation method that results in the lowest taxable income in a period of inflation is: -Specific identification method. -LIFO method. -Gross profit method. -Weighted-average cost method. -FIFO method.

LIFO method

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO. Date//Activities//drUnits Acquired at Cost//crUnits Sold at Retail May 1//Beginning Inventory//dr150 units @ $10.00 5//Purchase//dr220 units @ $12.00 10//Sales//cr140 units @ $20.00 15//Purchase//dr100 units @ $13.00 24//Sales//cr150 units @ $21.00 $3,580 $3,180 $1,860 $2,260 $2,100

$1,860 (150 * $10 = $1,500) + (30 * $12 = $360) = $1,860

During a period of steadily rising costs, the inventory valuation method that yields the highest reported net income is: -Weighted-average method. -FIFO method. -Specific identification method. -Average cost method. -LIFO method.

FIFO method.

A company has beginning inventory of 20 units at a cost of $12.00 each on October 1. On October 5, it purchases 16 units at $13.00 per unit. On October 12 it purchases 26 units at $14.00 per unit. On October 15, it sells 48 units. Using the FIFO periodic inventory method, what is the value of the inventory at October 15 after the sale? -$168.00 -$224.00 -$196.00 -$364.00 -$420.00

$196.00 Units available for sale = 20 + 16 + 26 = 62 units Units in inventory = 62 - 48 = 14 units Cost of inventory = 14 * $14 each = $196

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO. Date//Activities//Units Acquired at Cost//Units Sold at Retail May 1//Beginning Inventory//dr150 units @ $10.00 5//Purchase//dr220 units @ $12.00 10//Sales//cr140 units @ $20.00 15//Purchase//dr100 units @ $13.00 24//Sales//cr150 units @ $21.00 $3,180 $2,100 $2,260 $3,580 $1,860

$2,260 (80 * $12 = $960) + (100 * $13 = $1,300) = $2,260

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO. Date//Activities//drUnits Acquired at Cost//crUnits Sold at Retail May 1//Beginning Inventory//dr150 units @ $10.00 5//Purchase//dr220 units @ $12.00 10//Sales//cr140 units @ $20.00 15//Purchase//dr100 units @ $13.00 24//Sales//cr150 units @ $21.00

$3,180 (140 * $10 = $1,400) + [(10 * $10 = $100) + (140 * $12 = $1,680)] = $3,180

Grays Company has inventory of 30 units at a cost of $11 each on August 1. On August 3, it purchased 40 units at $12 each. 32 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 32 units that were sold? -$354. -$960. -$358. -$150. -$360.

$354 (30 units * $11) + (2 units * $12) = $354.00

All of the following statements related to goods on consignment are true except: -The consignor continues to own the consigned goods. -The consignor reports the goods in its inventory until sold. -The consignee reports the goods in its inventory until sold. -A consignee sells goods for the owner. -Goods on consignment are goods provided by the owner, call the consignor.

The consignee reports the goods in its inventory until sold.