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Exam 5: Reporting and Analyzing Inventories

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Question 31

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Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

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Question 32

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Given the following information,determine the cost of ending inventory at November 30 using the LIFO perpetual inventory method. November 3: 15 units were purchased at $8 per unit. November 11: 18 units were purchased at $9.50 per unit. November 15: 15 units were sold at $45 per unit. November 18: 30 units were purchased at $10.75 per unit. November 30: 20 units were sold at $55 per unit.

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Question 33

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A company normally sells its product for $20 per unit.However,the selling price has fallen to $15 per unit.This company's current inventory consists of 200 units purchased at $16 per unit.Replacement cost has now fallen to $13 per unit.Calculate the value of this company's inventory at the lower of cost or market.

When applying the lower of cost or market method of inventory valuation,market is defined as the ______________________.

If the seller is responsible for paying freight charges,then ownership of inventory passes when goods arrive at their destination.

An overstatement of ending inventory will cause

The understatement of the ending inventory balance causes:

A company had 240 units of inventory at a cost of $148 each on April 1.On April 5,the company purchased 440 units of inventory for $168 each.On April 12,the company purchased 140 units for $208 each.On April 20,480 units were sold.Given this information,determine the cost of the 480 units sold using the weighted average periodic inventory method.(Do not round your intermediate calculations; round the final answer to nearest dollar amount.)

A company has inventory of 15 units at a cost of $12 each on August 1.On August 5,they purchased 10 units at $13 per unit.On August 12,they purchased 20 units at $14 per unit.On August 15,they sold 30 units.Using the FIFO periodic inventory method,what is the value of the inventory at August 15 after the sale?

The ______________________ method of assigning costs to inventory and cost of goods sold requires that the cost of goods available for sale be divided by the units of inventory available when each sale takes place.

A corporation uses a LIFO perpetual inventory system. August 2,25 units were purchased at $12 per unit. August 5,10 units were purchased at $13 per unit. August 15,12 units were sold at $25 per unit. August 18,15 units were purchased at $14 per unit. What was the amount of the ending inventory for the month of August?

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

A company made the following merchandise purchases and sales during the current month: There was no beginning inventory.If the company uses the last-in,first-out perpetual inventory system,what would be the cost of the ending inventory?

Using the retail inventory method,if the cost to retail ratio is 60% and ending inventory at retail is $45,000,then estimated ending inventory at cost is $27,000.

In applying the lower of cost or market method to inventory valuation,market is defined as:

An understatement of ending inventory will cause an understatement of assets and equity on the balance sheet.

When units are purchased at different costs over time,it is simple to determine the cost per unit assigned to inventory.

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the LIFO periodic inventory method,what would be the cost of the ending inventory?

An error in the period-end inventory causes an offsetting error in the next period and therefore:

If obsolete or damaged goods can be sold,they will be included in inventory at their net realizable value.