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Exam 6: Inventories

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Question 1

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Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations. -Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the FIFO perpetual inventory method.

A) Total sales: $56,975.00 Cost of goods sold: $36,431.25
Gross profit: $20,543.75
Ending inventory: $19,981.2
B) Total sales: $56,975.00 Cost of goods sold: $36,587.50
Gross profit: $20,387.50
Ending inventory: $19,825.00
C) Total sales: $56,975.00 Cost of goods sold: $37,312.50
Gross profit: $19,662.50
Ending inventory: $19,573.25
D) Total sales: $56,975.00 Cost of goods sold: $37,401.75
Gross profit: $19,573.25
Ending inventory: $19,010.75

E) B) and D)
F) All of the above

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Question 2

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During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. What is the effect on the balance sheet and income statement?

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Assets, retained ear...

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Question 3

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The units of an item available for sale during the year were as follows: There are 19 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using LIFO.

If a fire destroys the inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. Use this information to answer the questions that follow. -The inventory data for an item for November are: Using a perpetual system, what is the cost of the goods sold for November if the company uses LIFO?

Match each description to the appropriate cost flow assumption (a-c). -Assigns the same value to all inventory units A)FIFO B)LIFO C)Weighted average

Match each description to the appropriate inventory system (a or b).​ -Under this system, only revenue is recorded when sales are made. A)Perpetual B)Periodic

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest ending inventory when costs are increasing A)FIFO B)LIFO C)Weighted average

The following lots of Commodity D were available for sale during the year. Use this information to answer the questions that follow. The firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year.​ -What is the ending inventory balance at the end of the year using the FIFO method?

During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

The inventory costing method that reports the most current prices in ending inventory is

If a company uses a periodic inventory system, the gross profit method can be used to estimate inventory for monthly or quarterly statements.

On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method?

Match each description to the appropriate document used for inventory control (a-c). -authorizes the purchase of inventory from an approved vendor A)Receiving report B)Vendor's invoice C)Purchase order

The following lots of Commodity Z were available for sale during the year. Use this information to answer the questions that follow. -The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year according to the LIFO method?

Match each description to the appropriate inventory system (a or b).​ -Average cost is rarely used with this system. A)Perpetual B)Periodic

Which document authorizes the purchase of the inventory from an approved vendor?

Inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error?

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. -Use the information in the table to answer this question. If Addison uses the weighted average cost method, calculate the inventory balance at the end of September?

The three inventory costing methods will normally each yield different amounts of net income.