Chapter 6

Assume Jones Manufacturing begins January with 10 units of inventory that cost $10 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $11 7 Sold 11 units What is the weighted average cost per unit in the perpetual system at the time the 11 units are sold on January 7?

$10.44

Assume Baxter Manufacturing begins March with 25 units of inventory that cost $20 each. During March, the following purchases and goods sold were: March 15 Purchased 10 units at $22 30 Sold 30 units Using the LIFO inventory costing method and the perpetual system, what is the ending Merchandise Inventory on March 30?

$100

Assume Jones Manufacturing begins January with 10 units of inventory that cost $10 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $11 7 Sold 11 units 15 Purchased 6 units at $12 30 Sold 15 units Using the FIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7?

$111

Assume Jones Manufacturing begins January with 10 units of inventory that cost $10 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $11 7 Sold 11 units 15 Purchased 6 units at $12 30 Sold 15 units Using the LIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7?

$118

Assume Baxter Manufacturing begins January with 11 units of inventory that cost $12 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $14 7 Sold 12 units 15 Purchased 6 units at $16 30 Sold 15 units Using the FIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7?

$146

Assume Baxter Manufacturing begins January with 11 units of inventory that cost $12 each. During January, the following purchases and goods sold were: Jan 5 Purchased 8 units at $14 7 Sold 12 units 15 Purchased 6 units at $16 30 Sold 15 units Using the LIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7?

$160

Assume the following beginning inventory, purchases, and sales during the month of April: April 1 Beginning Merchandise Inventory, 10 units @ $15 each 3 7 units sold 10 Purchased 9 units at $16 23 4 units sold Determine the Cost of Goods Sold using the LIFO inventory costing method and the periodic inventory system on April 30.

$174

Assume Jones Manufacturing begins March with 20 units of inventory that cost $15 each. During March, the following purchases and goods sold were: March 15 Purchased 25 units at $18 30 Sold 30 units Using the LIFO inventory costing method and the perpetual system, what is the ending Merchandise Inventory on March 30?

$225

Assume the following beginning inventory, purchases, and sales during the month of April: April 1 Beginning Merchandise Inventory, 10 units @ $20 each 3 8 units sold 10 Purchased 9 units at $21 23 4 units sold Determine the Cost of Goods Sold using the FIFO inventory costing method and the periodic inventory system on April 30.

$242

Assume Jones Manufacturing begins March with 20 units of inventory that cost $15 each. During March, the following purchases and goods sold were: March 15 Purchased 25 units at $18 30 Sold 30 units Using the FIFO inventory costing method and the perpetual system, what is the ending Merchandise Inventory on March 30?

$270

Bates Manufacturing purchased merchandise inventory for $10,000. At the end of the accounting period it has a market value of $8,700. Using the lower-of-cost-or-market rule, what is the amount to report on the Balance Sheet as Merchandise Inventory?

$8,700

The Tampa Manufacturing Company had the following financial data for December 31, the end of the current year: Cost of Goods Sold $500,000 Beginning Merchandise Inventory 55,000 Ending Merchandise Inventory 45,000 What is the inventory turnover for the year?

10.00 times per year

The Smith Manufacturing Company had inventory turnover of 9 for the current year. What is the days' sales in inventory for the current year?

40.56 days

Ace Manufacturing purchased merchandise inventory for $8,000. At the end of the accounting period it has a market value of $7,800. Using the lower-of-cost-or-market rule, what is the journal entry to record the adjustment?

Cost of Goods Sold $200 (Debit) Merchandise Inventory $200 (Credit)

Data for Shelby Company for the current year is as follows: Sales Revenue $10,000 Cost of Goods Sold: Beginning Merchandise Inventory $3,000 Net Cost of Purchases $7,000 Cost of Goods Available for Sale $10,000 Less: Ending Merchandise Inventory $2,000 Cost of Goods Sold $8,000 Gross Profit $2,000 Assume that the ending Merchandise Inventory was accidentally understated by $300. What are the correct amounts for Cost of Goods Sold and Gross Profit?

Cost of Goods Sold = $7,700 Gross Profit = $2,300

Data for Shelby Company for the current year is as follows: Sales Revenue $10,000 Cost of Goods Sold: Beginning Merchandise Inventory $3,000 Net Cost of Purchases $7,000 Cost of Goods Available for Sale $10,000 Less: Ending Merchandise Inventory $2,000 Cost of Goods Sold $8,000 Gross Profit $2,000 Assume that the ending Merchandise Inventory was accidentally overstated by $500. What are the correct amounts for Cost of Goods Sold and Gross Profit?

Cost of Goods Sold = $8,500 Gross Profit = $1,500

Which principle holds that a business's financial statements must report enough information for outsiders to make a knowledgeable decision about the company?

Disclosure Principle

Which of the following costing method results in the highest net income during a period of increasing inventory costs?

FIFO

The following statement is true regarding inventory errors (overstating or understating ending Merchandise Inventory):

Inventory errors will cancel out after two periods.

When inventory costs are rising, a company may prefer to use the __________ method in the perpetual system in order to pay the lowest amount of taxes.

LIFO

Which inventory costing method results in a higher Cost of Goods Sold to be reported on the Income Statement when inventory costs are rising?

LIFO

On December 31 of the current year, Aztec Company understated ending Merchandise Inventory by $10,000. How does this error affect the Cost of Goods Sold and the Net Income for the current year?

Overstates Cost of Goods Sold and understates Net Income.

Inventory turnover measures __________.

how rapidly merchandise inventory is sold