Interim Accounting chap 9 Practice

On January 1, Greenview Company adopted the dollar-value LIFO method. The inventory cost on January 1 was $112,000. On December 31, ending inventory had a cost of $136,400. The cost index for the year was 1.10. For what amount would ending inventory be reported?

$125,200

Platen purchased inventory on August 17 and received an invoice with a list price amount of $5,900 and payment terms of 4/10, n/30. Platen uses the net method to record purchases. For what amount should Platen record the purchase?

$5664

Jameson Company uses average cost and a perpetual system. On January 1, the company had 600 units of inventory at an average cost of $55 per unit for a total cost of $33,000. The company purchased and sold inventory during the month as follows: Purchases: January 10: 1,000 units at $59 = $59,000 January 20: 800 units at $62 = $49,600 Sales: January 12: 1,200 units January 28: 900 units What is the average cost per unit that should be used to determine the cost of the units sold on January 28?

$60.50

Otis Corporation uses a periodic system and the FIFO method. Otis had beginning inventory of 30 units purchased at $120 each and made the following purchases during the year: January 15:34 units at $110May 30:61 units at $84October 20:160 units at $60 Sales during the year totaled 271 units. What is the cost of ending inventory?

$840

Carrington Corporation uses a periodic system and the LIFO method. Carrington had beginning inventory of 30 units purchased at $120 each and made the following purchases during the year: January 15:34 units at $110May 30:61 units at $84October 20:160 units at $60 Sales during the year totaled 271 units. What is the cost of ending inventory?

1680

Saunderstown Company reported the following pretax data for its first year of operations. Net sales$ 2,950Cost of goods available for sale$ 2,480Operating expenses$ 700Effective tax rate30%Ending inventories: If LIFO is elected$ 990If FIFO is elected$ 1,250 What is Saunderstown's gross profit ratio if it elects LIFO?

49%

Bluestein Incorporated purchases goods from one of its suppliers and incurs freight charges to have the goods delivered. The company uses a perpetual system. Which of the following statements is correct?

Bluestein will record the freight charges in its Inventory account.

Octavia Corporation uses perpetual FIFO throughout the year to maintain internal records but at the end of the year adjusts these amounts to LIFO for financial reporting purposes. The company began the year with a credit balance of $50,000 in its LIFO reserve account. By the end of the year, the difference between LIFO and FIFO inventory balances increased to $60,000. Prepare the appropriate adjusting journal entry dated as of the end of the year.

Cost of goods sold 10,000 LIFO reserve 10,000

Barrington Company began the year with inventory of $100,000. During the year, the company purchased inventory in the amount of $750,000. Sales revenue for the year totaled $800,000. A physical count determined the cost of inventory at the end of the year to be $90,000. The adjusting entry needed at the end of the year under a periodic inventory system includes a:

Debit to Cost of Goods Sold for $760,000.

Which of the following might cause a reduction in the quality of earnings?

Inventory write-down Changes in inventory method LIFO liquidations

If costs are rising, which inventory method will result in the highest cost of goods sold?

LIFO

Hales Incorporated ships goods on December 30 to Osher Incorporated, who receives the goods on January 2. Both companies have December 31 year-ends. If the goods are shipped f.o.b. shipping point, which of the following statements is (are) correct?

Osher will include the goods in its December 31 inventory. Hales will record the sale on December 30. Osher will record the purchase on December 30.

Platter Incorporated purchases goods from a supplier and later returns those goods. Platter uses a perpetual system. Which of the following statements is correct?

Platter will record the return by reducing its Inventory account.

On December 15, Reynolds Incorporated ships goods on consignment to Manella Incorporated, who receives the goods on December 20. Manella sells the goods to a customer on January 5 of the following year. Both companies have December 31 year-ends. Which of the following statements is correct?

Reynolds will include the goods in its December 31 inventory.

Abbott Company uses a perpetual inventory system. When does Abbott record transactions relating to its inventory?

Sales revenue and cost of goods sold are both recorded at the time of the sale.

Which of the following statements about LIFO liquidations in periods in which costs are rising is true?

They distort the income statement.

Which of the following statements about the types of inventory is (are) correct?

When the manufacturing process is complete, the cost of the related inventory items is transferred into finished goods Inventory is classified as an asset in the balance sheet until it is sold, at which time the cost is transferred to cost of goods sold in the income statement. Explanation Knowledge Check 01 Merchandising companies purchase goods that are primarily in finished form. Unlike merchandising companies, manufacturing companies actually produce the goods they sell to customers. The cost of merchandise inventory includes the purchase price plus any other costs necessary to get the goods in condition and location for sale.