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Exam 5: Reporting and Analyzing Inventories

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Question 81

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When costs to purchase inventory regularly decline,which method of inventory costing will yield the lowest gross profit and income?

A) FIFO.
B) LIFO.
C) Weighted average.
D) Specific identification.
E) Gross margin.

F) A) and B)
G) A) and E)

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Question 82

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The lower of cost or market rule for inventory valuation is always applied to individual units separately rather than to major categories of inventory or to the entire inventory.

A) True
B) False

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Question 83

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A company's inventory records indicate the following data for the month of July: If the company uses the weighted average inventory valuation method and the perpetual inventory system,what would be the cost of its ending inventory? (Round average cost per unit to 2 decimals,and final answer to the nearest dollar.)

One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets.

A company's inventory records report the following: On August 15,it sold 30 units.Using the perpetual FIFO inventory method,what is the value of the inventory at August 15 after the sale?

The inventory turnover ratio is computed by dividing cost of goods sold by average merchandise inventory.

Explain the reason a company might use gross profit inventory method for valuing inventory.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the perpetual LIFO inventory method,what amount will be reported in cost of goods sold for the 11 units that were sold?

What specific costs and deductions are used to determine the final cost of merchandise inventory? Identify all costs including the incidental costs.

During a period of steadily rising costs,the inventory valuation method that yields the highest reported net income is:

Strods Company reported the following purchases and sales of its only product.Strods uses a periodic inventory system.Determine the cost assigned to the ending inventory using FIFO.

Apply the retail method to the following company information to calculate the cost of the ending inventory for the current period. $\begin{array} { | l | l | l | } \hline & \text { Cost } & \text { Retail } \\\hline \text { Beginning inventory } & \$ 20,224 & \$ 31,600 \\\hline \text { Net purchases } & 59,508 & 97,000 \\\hline \text { Sales } & & 89,000 \\\hline\end{array}$

The U.S.tax code requires:

A company reported the current month purchase and sales data for its only product and uses the perpetual inventory system.Determine the cost assigned to ending inventory and cost of goods sold using LIFO. $\begin{array}{|l|l|l|l|}\hline \text { Date } & \text { Activities } & \text { Units Acquired at Cost } & \text { Units Sold at Retail } \\\hline \text { Apri11 } & \text { Beginning Inventory } & 175 \text { units@\$15.00 } & \\\hline 4 & \text { Purchase } & 150 \text { units@\$16.00 } & \\\hline 7 & \text { Sales } & & 160 \text { units @\$30.00 } \\\hline 10 & \text { Purchase } & 200 \text { units@\$17.00 } & \\\hline 16 & \text { Sales } & &250 \text { units@\$30.00 } \\\hline 25 & \text { Purchase } &160 \text { units@\$18.00 } & \\\hline 128 & \text { Sales } &&150 \text { units@ } \$ 32.00\\\hline \end{array}$

The ________ ratio reflects how much inventory is available in terms of days' sales.

The cost of an inventory item includes the ________,plus ________ costs necessary to put it in a place and condition for sale

Ulrich had cost of goods sold of $6.7 million,ending inventory of $2.2 million,and average inventory of $1.9 million.Its days' sales in inventory equals:

Perfection Company had cost of goods sold of $853,000,ending inventory of $70,500,and average inventory of $71,600.Its inventory turnover equals:

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.Using the Periodic FIFO inventory valuation method,what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Oxford Packing Company reported net sales in November of the current year of $1,000,000.At the beginning of November,the company reported beginning inventory of $368,000.Cost of goods purchased during November amounted to $217,500.The company reported ending inventory at the end of November of $226,750.The company's gross profit rate for November of the current year was: