ACG chapter 6

A company has the following: Units Per unit price Total Balance, Dec. 1 200 $5.00 $1,000 Purchase, Dec. 15 100 5.30 530 Purchase, Dec. 28 100 5.50 550 The company sells inventory for $10 per unit. An end of December, inventory showed that 160 units were on hand. If the company uses FIFO and a periodic inventory system, what is the gross profit for the month?

$1,188 sales revenue= 240 units x $10/unit = $2,400 inventory sold in units = 200 + 100 + 100 - 160 = 240 units cost of goods sold using FIFO= (200 units x $5.00/unit) + (40 units x $5.30/unit) = $1,000 + 212 = $1,212 gross profit= sales revenue - cost of goods sold = $2,400 - 1,212 = $1,188

A company has the following data: Dec. 1, beg. bal. 150 units $ 780 Dec. 10, purchase 200 units 1,170 Dec. 15, purchase 200 units 1,260 Dec. 28, purchase 150 units 990 $4,200 A physical count of merchandise inventory on December 31 reveals that there are 210 units on hand. Using the average cost method and a periodic inventory system, the amount allocated to the ending inventory on December 31 is

$1,260 ending inventory equals the average cost per unit times the number of units of inventory in ending inventory. the average cost per unit equals the total cost of all inventory divides by the number of inventory units. Average cost per unit= $42,000/700 units = $6 per unit. Ending inventory= $6/unit x 210 units = $1,260

A company has the following inventory data: July 1 BI 20 units at $19 $380 7 Purchases 70 units at $20 1,400 22 Purchases 10 units at $22 220 =$2,000 a physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the FIFO inventory method and periodic inventory system, the amount allocated to cost of goods sold for July is

$1,340 Goods available for sale is $2,000 (100 units) Ending Inventory=32 units Cost of goods sold = goods available for sale-ending inventory= 100 units-32 units=68 units Using FIFO and periodic, the cost of goods sold includes the oldest 68 units and ending inventory includes the 32 newest units. Cost of goods sold= 20 units at $19/unit + (68 units - 20 units) * $20/unit= $380 + 960= $1,340

A company has the following inventory data: Beginning inventory July 1 20 units at $19 $ 380 7 Purchases 70 units at $20 1,400 22 Purchases 10 units at $22 220 $2,000 A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the FIFO inventory method and a periodic inventory system, the amount allocated to cost of goods sold for July is

$1,340 Goods available for sale is $2,000 (100 units) Ending inventory= 32 units Cost of goods sold= goods available for sale-ending inventory= 100 units-32 units=68 units Using FOB and periodic, the cost of goods sold includes the oldest 68 units and ending inventory includes the 32 newest units. Cost of goods sold=20 units at $19/unit + (68 units-20 units) x $20/unit = $380 + 960= $1,340

A company had the following: units costs per unit Dec. 1 Beg bal 36 $45 Dec. 14 Pur 62 $47 Dec. 21 Pur 44 $49 the company sold 102 units at $63 per unit. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO?

$1,544 Sales= (102*$63)=$6,426 Cost of goods sold=(44*$49)+(102-44)*$47=$4,882 gross margin= $6,426-4,882=$1,544

A company has the following data: num of units cost of units Beg. inventory, Dec. 1 8,000 $11 Purchase, Dec 19 13,000 $12 Purchase, Dec. 28 5,000 $13 There are 9,000 units of ending inventory on hand at December 31. What is the company's ending inventory under LIFO using a periodic inventory system?

$100,000 LIFO periodic inventory ending inventory under LIFO uses the oldest costs of inventory to compute ending inventory. Ending inventory= (8,000*$11) + (1,000*$12) = $100,000

A company has the following information: Category Cost Market A $57,000 $60,000 B 40,000 38,000 C 80,000 81,000 If the company values its inventory using lower-of-cost-or-market, the value of the inventory reported on its balance sheet would be Group of answer choices

$175,000 Category Cost Market LCM A $57,000 $60,000 $57,000 B 40,000 38,000 38,000 C 80,000 81,000 80,000 total LCM= $175,000

A company has the following data: Dec. 1 Beginning inventory 32 units at $205 per unit Dec. 5 Purchases 188 units at $222 per unit Dec. 21 Purchases 64 units at $210 per unit The company sold 102 units in December. What is the company's cost of goods sold using LIFO and a periodic inventory system?

$21,876 goods available for sale is 284 units (32+188+64=284 units) the company sold 102 units (given) ending inventory= 182 units (284-102=182 units) using LIFO and periodic, the cost of goods sold includes the newest 102 units and ending inventory includes the 182 oldest units. Cost of goods sold=[64 x $210] + [38 x $222] = $21,876

the company sold 100 units at 80 each and has a tax rate of 25%. Assuming that a periodic inventory system is used and operating expenses are 1,000, that is the companys gross profit using LIFO

$3, 655 sales rev=100 * $80= $8,000 cost of goods sold+ (45*$44)+((100-45)*%43)= $1,980+2,365=$4,345 gross profit=sales revenue-cost of goods sold= $8,000-4,345=$3,655

A company uses LIFO. At the beginning of the current year its inventory was $225,000, and at the end of the current year its inventory is $300,000. At the start of the year its LIFO reserve was $20,000 and at the end of the year its LIFO reserve is $25,000. The company operates in an inflationary environment. If the company used FIFO instead of LIFO, its ending inventory would be

$325,000 the LIFO reserve is the difference between inventory using LIFO and inventory using FIFO. If the company operates in an inflationary environment (raising prices), then the LIFO reserve is a positive number, add the LIFO reserve to LIFO inventory to determine the company's FIFO inventory. FIFO ending inventory = LIFO ending inventory + LIFO reserve = $300,000 + 25,000= $325,000

At December 31, Moore Company's inventory records indicated a balance of $420,000. Upon further investigation it was determined that this amount included the following: (1) $54,000 in inventory purchases made by Moore shipped from the seller December 29 terms FOB shipping point, but not due to be received until January 2. (2) $25,000 in inventory purchases made by Moore shipped from the seller December 29 terms FOB destination, but not due to be received until January 2. (3) $6,000 in goods sold by Moore with terms FOB destination on December 29. The goods are not expected to reach their destination until January 5. (4) $7,000 in goods sold by Moore with terms FOB shipping point on December 29. The goods are not expected to reach their destination until January 4. (5) $15,000 of goods owned by Moore Company held on consignment by Dollywood Company. What is Moore's correct ending inventory balance at December 31?

$388,000 Do not include the following inventory: 1. FOB destination purchases not yet received (25,000) 2. FOB shipping point goods sold and shipped (7,000) 3. Goods held on consignment (none) Ending inventory= $420,000-25,000-7,000= $388,000

At December 31, Moore Company's inventory records indicated a balance of $420,000. Upon further investigation it was determined that this amount included the following: (1) $54,000 in inventory purchases made by Moore shipped from the seller December 29 terms FOB shipping point, but not due to be received until January 2. (2) $25,000 in inventory purchases made by Moore shipped from the seller December 29 terms FOB destination, but not due to be received until January 5. (3) $6,000 in goods sold by Moore with terms FOB destination on December 29. The goods are not expected to reach their destination until January 4. (4) $7,000 in goods sold by Moore with terms FOB shipping point on December 29. The goods are not expected to reach their destination until January 4. (5) $15,000 of goods owned by Moore Company held on consignment by Dollywood Company. What is Moore's correct ending inventory balance at December 31?

$388,000 do not include the following inventory: 1. FOB destination purchases not yet received ($25,000) 2. FOB shipping point goods sold and shipped ($7,000) 3. Goods held on consignment Ending inventory= $420,000-25,000-7,000= $388,000

A company has the following inventory data: Cost Data Market Data Tin 24,000 20,400 Steel 18,000 19,000 Aluminum 28,000 25,6000

$65,000 Cost is compared to market for each inventory category as followed: Tin= $20,400 Steel= $18,000 Aluminum= $25,600 Total= $64,000

Sales revenue is $1,000,000, cost of goods purchased is $480,000, beginning inventory is $40,000, and cost of goods sold is $440,000. How munch is ending inventory?

$80,000 Beginning inventory + Purchases - Ending Inventory = Cost of goods sold 40,000+480,000- ending inventory= 440,000 ending inventory= 40,000+480,000+440,000= 80,000

Sales revenue is $1,000,000, cost of goods purchased is $480,000, beginning inventory is $40,000, and cost of goods sold is $440,000. How much is ending inventory?

$80,000 beginning inventory+purchases-ending inventory=cost of goods sold 40,000+480,000-ending inventory=440,000 ending inventory= 40,000+480,000+440,000=80,000

A company has the following data: units per unit cost Inven, Dec. 1 6,000 8 Purch, Dec. 2 18,000 10 Purch, Dec. 28 16,000 12 if the company has 8,000 units on hand at December 31, how much is the cost of ending inventory under the average-cost method in a periodic inventory system?

$84,000 ending inventory equals the average cost per unit times the number of units of inventory in ending inventory. the average cost per unit equals the total cost of all inventory amounts divided by the number of inventory units. Average cost per unit= (6,000*$8)+(18,000*$10)+(16,000*$12)/(6,000+18,000+16,000)=$420,000/40,000 units= $10.5 per unit. Ending inventory= $10.5*8,000 units= $84,000

Which of these should a company include in its ending inventory? (1) Goods in transit it sold with terms FOB destination (2) Goods in transit it sold with terms FOB shipping point (3) Goods in transit it purchased with terms FOB destination (4) Goods in transit it purchased with terms FOB shipping point. Which of these should be included in its inventory?

(1) Goods in transit it sold with terms FOB destination and (4) Goods in transit it purchased with terms FOB shipping point

Which of these should a company include in its ending inventory? (1) Goods in transit it purchased with terms FOB destination (2) Goods in transit it purchased with terms FOB shipping point (3) Goods in transit it sold with terms FOB destination (4) Goods in transit it sold with terms FOB shipping point Which of these should be included in its inventory?

(2) Goods in transit it purchased with terms FOB shipping point and (3) Goods in transit it sold with terms FOB destination

a company uses the periodic inventory method. Beginning inventory is overstated by $10,000 because the prior's tear's ending inventory was overstated by $10,000. The company's ending inventory for this period is correct. The current period's gross profit is ________--- and this year's ending retained earnings is ______________.

(i) understated (ii) neither overstated nor understated

1000 begining of inv and 1200 ending inv using LIFO. LIFO reserve of 300 at end of year if FIFO instead of LIFO, ending inv would be

1,500 FIFO ending inv= 1,200+300+1500

A company has the following: Net sales, $2,000,000 Cost of goods sold, $960,000 Beginning inventory, $25,000 Ending inventory, $35,000 Net income, $20,000 What is its days' in inventory?

11.4 inventory turnover= cost of goods sold divides by average inventory inventory turnover= $960,000/[(25,000 + 35,000)/2] = 32.00 Days in inventory = 365/inventory turnover Days in inventory= 365/32.00 = 11.41

a physical count of merchandise inventory on july 30 reveals that there are 25 units on hand. using the FIFO inventory method and a periodic inventory system, the amount allocated to ending inventory for july is

535 goods for sale 2,090 (100 inits) ending inv = 25 units costs of good sold= goods available for sale-ending inv= 100 units-25 units= 75 units ending inv= 10 units at 22/unit=(25 units-10 units)*21/unit= 220+315= 535

what is the companys days in inventory for 2022

55.1 days

there are 100 units of ending inventory on hand at dec 31. what is the companys ending inv using LIFO and periodic inv sys?

572 ending inv= (90* 5.00)+ (10* 5.10)= 501

A company has the following: 2022 2021 Ending inventory 37,650 30,490 cost of gs 225,750 261,300 sales revenue 480,000 500,000 net income 60,000 50,000 what is the company's inventory turnover for 2022?

6.6 times Inventory turnover= cost of goods sold/ average inventory Inventory turnover= $225,750/($37,650+$30,490)/2 = 6.626

a company has the following: 2022 2021 ending inv 34,580 32,650 cost of gs 182,000 163,000 sales rev 300,000 250,000 net income 100,000 80,000 what is the company's days in inventory for 2022

67.4 days inventory turnover= cost of goods sold/average inventory inventory turnover= 182,000/(34,580+32,650)/2= 5.44142 days in inventory= 365/inventory turnover= 365/5.4142= 67.4

tin stainless stell and aluminum

800 350+150+300=800

8,000 units on hand at dec 31, how much is the cost of ending inv under the average cost method

84,000 10.5*8,000 units= $84,000

Inventory is accounted for at cost. After a company has determined the quantity of units of inventory, it applies unit costs to the quantities to determine the total cost of inventory and the cost of goods sold. Which of the following statements is not a method for computing the cost of inventory?

Allowance estimation

Which inventory method usually results in ending inventory being the closest to the current cost of replacing inventory?

FIFO method

In a period of inflation, the costs allocated to ending inventory will approximate their current cost if the

FIFO method is used

in a period of inflation, the costs allocated to ending inventory will approximate their current cost of the

FIFO method is used

Which of the following would most likely employ the specific identification method of inventory costing?

Jewelry store

With the assumption of costs and prices generally rising, which of the following is correct?

LIFO provides the closest valuation of cost of goods sold to replacement cost of inventory sold.

Which of the following statements is true?

Specific identification method inventory valuation requires physical flow of goods to be representative of the cost flow.

Which statement concerning lower of cost or market (LCM) is false?

Under the LCM basis, inventory is recorded at market if it increases in value after it is acquired.

Which situation requires using the lower-of-cost-or-market basis to valuing inventory instead of the cost basis?

a decline in the current replacement cost of the inventory

a company uses the periodic inventory method. An understatement of ending inventory in one period results in

an overstatement of net income of the nest period

A company uses the periodic inventory method and the beginning inventory is overstated by $4,000 because the ending inventory in the previous period was overstated by $4,000; the ending inventory for this period is correct. The amounts reflected in the current end of the period balance sheet are

assets are correct and stockholder's equity is correct.

sales rev is $1,000,000 cost of goods purchased is 620,000 ending inventory 60,000 and cost of goods sold is 650,000. how much is beginning inventory

beginning inventory + purchases - ending inventory = costs of goods sold BI + 620,000 - 60,000 = 650,000 BI= 650,000 -620,000 + 60,000 = 90,000

what is the underlying rationale for the lower-of-cost-or-market rule

conservatism

Inventory costing methods place primary reliance on assumptions about the flow of

costs

Which of the following statements is true?

goods held on consignment are not owned by the company that holds them, and they should not be included in the ending inventory of the company that holds them.

which of the following should be included in the physical inventory of a company

goods shipped on consignment to another company

Which of these transactions would cause the days in inventory ratio to increase the most?

increasing the amount of inventory on hand and decreasing sales

If there is an error in the ending inventory affecting the net income of the current period, what will happen to the net income of the next accounting period?

it will have the reverse effect on the net income during the next accounting period

In periods of rising prices, what will LIFO produce?

lower total assets than FIFO

a company uses the periodic inventory method. an error int eh physical count of goods on hand at teh end of a period resulted in a 10,000 overstatement of ending inventory. the effect of this error in the current period is that gross profit is _______ and retaind earnign is ______--.

overstated and overstated

which of the following is an inventory account

raw materials

all of the following statements are true regarding the LIFO reserve except:

the LIFO reserve normally decreases the longer a company uses LIFO

Companies must arrive at an accurate count of inventory for financial reporting purposes. What determines whether goods should be included in the inventory it reports on its balance sheet is

the company's title or ownership of the goods.

Manufactured inventory that has begun the production process but is not yet completed is called

work in progress

which of the following is an inventory account

work in progress