Chapter 5/6 Quiz
Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June 1 Beginning inventory 42u @$20 each June 15 Sale of 34 u @ $50 each June 29 Purchase 34 u @ $25 each The cost of the ending inventory is:
$1,010 Purchases Cost of goods sold Balance Units Units Date Units Cost Total Units Cost Total Units Units cost Total June 1 42 $20 $840 42 $20 $840 June 15 34 $20 $680 8 $20 $160 June 29 34 $25 $850 8 $20 $160 34 $25 $850 42 $1,010
A company's warehouse contents were destroyed by a flood on September 12. The following information was the only information that was salvaged: 1. Inventory, beginning: $28,100 2. Purchases for the period: $17,100 3. Sales for the period: $55,100 4. Sales returns for the period: $710 The company's average gross profit ratio is 36%. What is the estimated cost of the lost inventory?
$10,390.40. COGS = ($55,100 − $710) × 64% = $34,809.60 Goods available for sale = $28,100 + $17,100 = $45,200 EI = $45,200 - $34,809.60 = $10,390.40
On April 24 of the current year, The Memphis Pecan Company experienced a tornado that destroyed the company's entire inventory. At the beginning of April, the company reported beginning inventory of $228,250. Inventory purchased during April (until the date of the tornado) was $199,300. Sales for the month of April through April 24 were $644,000. Assuming the company's typical gross profit ratio is 50%, estimate the amount of inventory destroyed in the tornado.
$105,550 Beginning inventory on July 1 was $228,250. Purchases for the month of July amounted to $199,300, yielding cost of goods available for sale of $427,550. If the company's typical gross profit ratio is 50% and if sales for the month of July were $644,000, then the cost of goods sold during July was $322,000. Subtracting that amount from the cost of goods available for sale yields ending inventory of $105,550.
On April 24 of the current year, The Memphis Pecan Company experienced a tornado that destroyed the company's entire inventory. At the beginning of April, the company reported beginning inventory of $228,550. Inventory purchased during April (until the date of the tornado) was $199,600. Sales for the month of April through April 24 were $644,300. Assuming the company's typical gross profit ratio is 50%, estimate the amount of inventory destroyed in the tornado.
$106,000 Beginning inventory on July 1 was $228,550. Purchases for the month of July amounted to $199,600, yielding cost of goods available for sale of $428,150. If the company's typical gross profit ratio is 50% and if sales for the month of July were $644,300, then the cost of goods sold during July was $322,150. Subtracting that amount from the cost of goods available for sale yields ending inventory of $106,000.
Hull Company reported the following income statement information for 2015: SEE PIC The beginning inventory balance for 2015 is correct. However, the ending inventory figure for 2015 was overstated by $34,000. Given this information, the correct gross profit figure for 2015 would be:
$108,000 If ending inventory of $158,000 for 2015 were overstated by $34,000, the correct amount of ending inventory was $124,000. As a result, cost of goods sold for 2015 was not $282,000 as reported, but rather $316,000. Thus, gross profit for 2015 was $108,000 (Sales of $424,000 - Cost of Goods Sold of $316,000).
Jammer Company uses a weighted average perpetual inventory system and reports the following: August 2 Purchase 7 units at $10.00 per unit. August 18 Purchase 9 units at $13.00 per unit. August 29 Sale 14 units. August 31 Purchase 12 units at $13.00 per unit. What is the per-unit value of ending inventory on August 31?
$12.81 *$187/16 units = $11.69/unit **$179/14 units = $12.81/unit
Cushman Company had $844,000 in sales, sales discounts of $12,660, sales returns and allowances of $18,990, cost of goods sold of $400,900, and $290,335 in operating expenses. Net income equals:
$121,115 Net Income = $844,000 - $12,660 - $18,990 - $400,900 - $290,335 = $121,115
A company has beginning inventory of 10 units at a cost of $10 each on February 1. On February 3, it purchases 20 units at $12 each. 12 units are sold on February 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that are sold?
$124 (10 units × $10) + (2 units × $12) = $124
A company's warehouse contents were destroyed by a flood on September 12. The following information was the only information that was salvaged: 1. Inventory, beginning: $28,500 2. Purchases for the period: $17,500 3. Sales for the period: $55,500 4. Sales returns for the period: $750 The company's average gross profit ratio is 40%. What is the estimated cost of the lost inventory?
$13,150.00 COGS = ($55,500 − $750) × 60% = $32,850.00 Goods available for sale = $28,500 + $17,500 = $46,000 EI = $46,000 - $32,850.00 = $13,150.00
Big Box Store has operated with a 30% average gross profit ratio for a number of years. It had $112,000 in sales during the second quarter of this year. If it began the quarter with $19,200 of inventory at cost and purchased $73,200 of inventory during the quarter, its estimated ending inventory by the gross profit method is:
$14,000 COGS = $112,000 × 70% = $78,400 Goods available for sale = $19,200 + $73,200 = $92,400 End. Inv. = $92,400 - $78,400 = $14,000
On December 31 of the current year, Plunkett Company reported an ending inventory balance of $211,000. The following additional information is also available: Plunkett sold and shipped goods costing $37,200 to Savannah Enterprises on December 28 with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $211,000. Based on the above information, the amount that Plunkett should report in ending inventory on December 31 is:
$153,600 Start with beginning inventory of $211,000. The information in the first bullet point was handled correctly. No adjustment is needed for that merchandise. For the second bullet point, the $43,200 of goods should not have been included in ending inventory since the goods were shipped FOB destination. Subtract $43,200. For the third bullet point, ending inventory should not include goods held on consignment from another company. Subtract $14,200. The information in the fourth bullet point was handled correctly. No adjustment is needed. $211,000 - $43,200 - $14,200 = $153,600.
Marquis Company uses a weighted-average perpetual inventory system. August 2, 24 units were purchased at $5 per unit. August 18, 29 units were purchased at $7 per unit. August 29, 26 units were sold. What is the amount of the cost of goods sold for this sale?
$158.45 Average cost = [(24 * $5) + (29 * $7)]/53 units = $6.09/unit Cost of sale = 26 units * $6.09/unit = $158.45
Prentice Company had cash sales of $94,400, credit sales of $83,525, sales returns and allowances of $1,750, and sales discounts of $3,525. Prentice's net sales for this period equal:
$172,650 Net Sales = $94,400 + $83,525 - $1,750 - $3,525 = $172,650
A company's inventory records report the following: August 1 Beginning balance 22 units @ $12 August 5 Purchase 17 units @ $11 August 12 Purchase 21 units @ $12 On August 15, it sold 44 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?
$192
Grays Company has inventory of 16 units at a cost of $11 each on August 1. On August 3, it purchased 26 units at $10 each. 18 units are sold on August 5. Using the FIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 18 units that were sold?
$196 (16 units * $11) + (2 units * $10) = $196
A company purchased $3,000 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $330 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:
$2,617 Cash Paid = ($3,000 - $330) * 0.98 = $2,617
Jammer Company uses a weighted average perpetual inventory system and reports the following: August 2 Purchase 23 units at $18.00 per unit. August 18 Purchase 25 units at $19.00 per unit. August 29 Sale 46 units. August 31 Purchase 28 units at $21.00 per unit. What is the per-unit value of ending inventory on August 31?
$20.83 *$889/48 units = $18.52/unit **$625.04/30 units = $20.83/unit SEE PIC
Jammer Company uses a weighted average perpetual inventory system and reports the following: August 2 Purchase 23 units at $18.00 per unit. August 18 Purchase 25 units at $19.00 per unit. August 29 Sale 46 units. August 31 Purchase 28 units at $21.00 per unit. What is the per-unit value of ending inventory on August 31? SEE PIC
$20.83 SEE PIC
A company's inventory records report the following in November of the current year: Beginning November 1 4 units @ $8 Purchase November 2 11 units @ $10 Purchase November 6 7 units @ $12 On November 8, it sold 20 units for $38 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 20 units sold?
$210 (7 x $12) + (11 x $10) + (2 x $8) = $210
A company has net sales of $795,800and cost of goods sold of $574,800. Its net income is $28,030. The company's gross margin and operating expenses, respectively, are:
$221,000 and $192,970 Gross Margin = Net Sales - Cost of Goods Sold; $795,800 - $574,800 = $221,000 Operating Expenses = Gross Margin - Net Income; $221,000 - $28,030 = $192,970
Grays Company has inventory of 27 units at a cost of $8 each on August 1. On August 3, it purchased 37 units at $9 each. 29 units are sold on August 5. Using the FIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 29 units that were sold?
$234 (27 units * $8) + (2 units * $9) = $234
A company had inventory on November 1 of 5 units at a cost of $17 each. On November 2, they purchased 12 units at $19 each. On November 6 they purchased 8 units at $22 each. On November 8, 12 units were sold for $52 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
$237 Units available = 5 + 12 + 8 = 25 units Units in inventory = 25 - 12 units = 13 units Cost of inventory = (5 * $17) + (8 * $19) = $237
Grays Company has inventory of 22 units at a cost of $10 each on August 1. On August 3, it purchased 32 units at $12 each. 24 units are sold on August 5. Using the FIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 24 units that were sold?
$244 (22 units * $10) + (2 units * $12) = $244.00
A company had inventory on November 1 of 5 units at a cost of $10 each. On November 2, they purchased 19 units at $12 each. On November 6 they purchased 15 units at $15 each. On November 8, 17 units were sold for $45 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
$254 Units available = 5 + 19 + 15 = 39 units Units in inventory = 39 - 17 units = 22 units Cost of inventory = (5 * $10) + (17 * $12) = $254
A company had inventory on November 1 of 5 units at a cost of $15 each. On November 2, they purchased 14 units at $17 each. On November 6 they purchased 10 units at $20 each. On November 8, 12 units were sold for $50 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
$279 Units available = 5 + 14 + 10 = 29 units Units in inventory = 29 - 12 units = 17 units Cost of inventory = (5 * $15) + (12 * $17) = $279
A company's inventory records report the following: August 1 Beginning balance 27 units @ $17 August 5 Purchase 22 units @ $16 August 12 Purchase 26 units @ $17 On August 15, it sold 54 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?
$357 Units available for sale = 27 + 22 + 26 = 75 units Units in inventory = 75 - 54 = 21 units Cost of inventory = 21 * $17 each = $357
Bedrock Company reported a December 31 ending inventory balance of $413,500. The following additional information is also available: • The ending inventory balance of $413,500 included $72,300 of consigned inventory for which Bedrock was the consignor. • The ending inventory balance of $413,500 included $22,600 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. Based on this information, the correct balance for ending inventory on December 31 is:
$390,900 Start with beginning inventory of $413,500. The information in the first bullet point was handled correctly since inventory should include consigned goods for which the subject company is the consignor. No adjustment. With respect to the second bullet point, inventory should not include office supplies held for use. Subtract $22,600.Ending inventory should be $413,500 − $22,600 = $390,900.
A company's warehouse contents were destroyed by a flood on September 12. The following information was the only information that was salvaged: 1. Inventory, beginning: $29,900 2. Purchases for the period: $18,900 3. Sales for the period: $56,900 4. Sales returns for the period: $890 The company's average gross profit ratio is 21%. What is the estimated cost of the lost inventory?
$4,552.10. COGS = ($56,900 − $890) × 79% = $44,247.90 Goods available for sale = $29,900 + $18,900 = $48,800 EI = $48,800 - $44,247.90 = $4,552.10
Cushman Company had $836,000 in sales, sales discounts of $12,540, sales returns and allowances of $18,810, cost of goods sold of $397,100, and $287,585 in operating expenses. Gross profit equals:
$407,550 Gross Profit (Margin) = $836,000 - $12,540 - $18,810 - $397,100 = $407,550
A company has sales of $735,800 and cost of goods sold of $294,800 Its gross profit equals:
$441,000 Gross Margin = Sales - Cost of Goods Sold Gross Margin = 735,800 - $294,800 = $441,000
Cushman Company had $830,000 in net sales, $363,125 in gross profit, and $207,500 in operating expenses. Cost of goods sold equals:
$466,875 Cost of Goods Sold = Net Sales - Gross Profit; $830,000 - $363,125 = $466,875
A company's inventory records report the following: August 1 Beginning balance 30 units @ $20 August 5 Purchase 25 units @ $19 August 12 Purchase 29 units @ $20 On August 15, it sold 60 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?
$480
Jefferson Company has sales of $302,000 and cost of goods available for sale of $270,200. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:
$58,800 If sales for the period were $302,000 and the company's typical gross profit ratio is 30%, gross profit would be approximately $90,600. That means that cost of goods sold must have been $211,400. Subtracting cost of goods sold of $211,400 from the $270,200 of cost of goods available for sale yields ending inventory of $58,800.
A company had beginning inventory of 10 units at a cost of $25 each on March 1. On March 2, it purchased 10 units at $44 each. On March 6 it purchased 6 units at $30 each. On March 8, it sold 22 units for $73 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold?
$750 (10 * $25) + (10 * $44) + (2 * $30) = $750
A company purchased $8,900 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $445 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:
$8,201. Cash Paid = ($8,900 - $445) * 0.97 = $8,201
A company had the following purchases during the current year: January: 18 units at $128 February: 28 units at $138 May: 23 units at $148 September: 20 units at $158 November: 18 units at $168 On December 31, there were 58 units remaining in ending inventory. These 58 units consisted of 10 from January, 12 from February, 14 from May, 12 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?
$8,584 Ending Inventory 10@$128=$1,280 12@$138 =1,656 14@$148 =2,072 12@$158=1,896 10 @$168 =1,680 58 units $ 8,584
On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $215,500. Inventory purchased during August was $192,550. Sales for the month of August were $542,600. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.
$82,490 Merchandise available for sale = $215,500 + $192,550 = $408,050 Estimate cost of goods sold = $542,600 * 60% = $325,560 Estimated ending inventory = $408,050 − $325,560 = $82,490.
On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $215,800. Inventory purchased during August was $192,670. Sales for the month of August were $543,200. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.
$82,550 Merchandise available for sale = $215,800 + $192,670 = $408,470 Estimate cost of goods sold = $543,200 * 60% = $325,920 Estimated Ending inventory = $408,470 − $325,920 = $82,550.
On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $216,050. Inventory purchased during August was $192,770. Sales for the month of August were $543,700. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.
$82,600 Merchandise available for sale = $216,050 + $192,770 = $408,820 Estimate cost of goods sold = $543,700 * 60% = $326,220 Estimated Ending inventory = $408,820 − $326,220 = $82,600
On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $216,150. Inventory purchased during August was $192,810. Sales for the month of August were $543,900. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.
$82,620 Merchandise available for sale = $216,150 + $192,810 = $408,960 Estimate cost of goods sold = $543,900 * 60% = $326,340 Estimated ending inventory = $408,960 − $326,340 = $82,620
KLM Corporation's quick assets are $5,915,000, its current assets are $11,895,000 and its current liabilities are $8,017,000. Its acid-test ratio equals:
0.74 Acid-Test Ratio = Quick Assets/Current Liabilities Acid-Test Ratio = $5,915,000/$8,017,000 = 0.74
A company's current assets are $19,490, its quick assets are $10,800 and its current liabilities are $12,700. Its quick ratio equals:
0.85 Acid-Test Ratio = Quick Assets/Current Liabilities Acid-Test Ratio = $10,800/$12,19012,700 = 1
A company's current assets are $24,920, its quick assets are $14,490 and its current liabilities are $12,370. Its acid-test ratio equals:
1.17. Acid-Test Ratio = Quick Assets/Current Liabilities Acid-Test Ratio = $14,490/$12,370 = 1.17
A company's current assets are $26,420, its quick assets are $15,090 and its current liabilities are $12,520. Its acid-test ratio equals:
1.21 Acid-Test Ratio = Quick Assets/Current Liabilities Acid-Test Ratio = $15,090/$12,520 = 1.21
Beckenworth had cost of goods sold of $10,421 million, ending inventory of $3,089 million, and average inventory of $2,065 million. Its days' sales in inventory equals:(Use 365 days a year.)
108.2 days. Days' Sales in Inventory = Ending Inventory/Cost of Goods Sold * 365 Days' Sales in Inventory = $3,089/$10,421 * 365 = 108.2 days
Using the following year-end information for Calvin's Clothing, calculate the current ratio and acid-test ratio for the business: Cash $ 61,360 Short-term investments 17,000 Accounts receivable 64,000 Inventory 330,000 Prepaid expenses 9,370 Accounts payable 111,000 Other current payables 32,800
3.35 and 0.99 Current Ratio = Current Assets/Current Liabilities Current Ratio = $481,730/$143,800 = 3.35 Acid-Test Ratio = Quick Assets/Current Liabilities Acid-Test Ratio = $142,360/$143,800 = 0.99
Giorgio had cost of goods sold of $9,613 million, ending inventory of $2,281 million, and average inventory of $2,157 million. Its inventory turnover equals:
4.46 Inventory Turnover = Cost of Goods Sold/Average Inventory Inventory Turnover = $9,613/$2,157 = 4.46 times
Giorgio had cost of goods sold of $9,565 million, ending inventory of $2,233 million, and average inventory of $2,109 million. Its inventory turnover equals:
4.54 Inventory Turnover = Cost of Goods Sold/Average Inventory Inventory Turnover = $9,565/$2,109 = 4.54 times
Use the following information for Shafer Company to compute inventory turnover for 2015. 2015 2014 Net sales $656,500 $584,700 Cost of goods sold 390,300 361,020 Ending inventory 79,500 81,180
4.86 Inventory Turnover = Cost of Goods Sold/Average Inventory Inventory Turnover = $390,300/[($79,500 + $81,180)/2] Inventory Turnover = $390,300/$80,340 = 4.86
Sandoval needs to determine its year-end inventory. The warehouse contains 38,000 units, of which 4,800 were damaged by flood and are not sellable. Another 3,800 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 5,800 units at a consignee's location. How many units should Sandoval include in its year-end inventory?
42,800 38,000 - 4,800 + 3,800 + 5,800 = 42,800
A company's net sales were $702,300, its cost of goods sold was $240,890 and its net income was $47,700. Its gross margin ratio equals:
65.7% Gross Margin Ratio = (Net Sales - Cost of Goods Sold)/Net Sales Gross Margin Ratio = ($702,300 - $240,890)/$702,300 = 65.7%
On September 12, Vander Company sold merchandise in the amount of $2,600 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $1,800. Vander uses the periodic inventory system. On September 14, Jepson returns some of the merchandise. The selling price of the merchandise is $225 and the cost of the merchandise returned is $160. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Vander makes on September 18 is:
Cash Dr 2,327.50 Sales discounts Dr 47.50 Accounts receivable Cr 2,375.00 Accounts Receivable = $2,600 - $225 = $2,375.00 Sales Discounts = $2,375 * .02 = $47.50 Cash = $2,375 - $47.50 = $2,327.50
A company had a gross profit of $330,000 based on sales of $415,000. Its cost of goods sold equals $745,000.
False
A company had net sales of $575,000 and cost of goods sold of $360,000. Its gross margin equals $935,000.
False
A company had net sales of $581,000 and cost of goods sold of $363,000. Its gross margin equals $944,000.
False
A company's current ratio is 1.8 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.
False
A company's current ratio is 2.1 and its quick ratio is 0.36. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.
False
Using the retail inventory method, if the cost to retail ratio is 70% and ending inventory at retail is $152,000, then estimated ending inventory at cost is $214,143.
False $152,000 * 0.70 = $106,400
