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Exam 6: Inventories

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Question 21

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The method of computing inventory that uses records of the selling prices of the merchandise is called

A) retail method
B) last-in, first-out
C) first-in, first-out
D) average cost

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

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Question 22

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The following information was extracted from the Stone Company's records. Complete the following:

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Complete the following:
* Net Sales: $...

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Question 23

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The following data were taken from Bowman Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Bowman Inc. Round to two decimal places.

During periods of decreasing costs the use of the LIFO method of costing inventory will result in a lower amount of net income than would result from the use of the FIFO method.

All of the following are reasons to use an estimated method of costing inventory except:

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September: If Addison uses FIFO, the cost of the ending merchandise inventory on September 30 is

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold?

In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct costs of disposal.

The following units of an inventory item were available for sale during the year: The firm uses the periodic inventory system. During the year, 60 units of the item were sold. The value of ending inventory using LIFO is:

a. Explain the effect of the following on the financial statements: Goods held on consignment were included in the ending inventory count. Goods purchased FOB shipping point were in transit on the last day of the year. The goods were not counted as part of ending inventory. Goods sold FOB shipping point were in transit on the last day of the year. These goods were not counted as part of ending inventory. b. What happens if inventory errors are not found and corrected?

Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.

Too much inventory on hand

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

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

List three different security measures taken by stores to safeguard inventory.

The following data regarding purchases and sales of a commodity were taken from the related perpetual inventory account:

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the LIFO inventory cost method.

The units of an item available for sale during the year were as follows: There are 48 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost by (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method. Show your work.

Damaged merchandise that can be sold only at prices below cost should be valued at

Complete the chart using the LIFO and FIFO costing methods, assuming a period of increasing costs: