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Exam 5: Reporting and Analyzing Inventories

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Question 21

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A company uses the retail inventory method and has the following information available concerning its most recent accounting period: $\begin{array} { | l | l | l | } \hline & \text { At Cost } & \text { At Retail } \\\hline \text { Tanuary } 1 \text { beginning inventory } & \$ 167,340 & \$ 304,240 \\\hline \text { Cost of goods purchased } & 561,850 & 1,021,560 \\\hline \text { Sales } & & 940,400 \\\hline \text { Sales returns } & & 40,200 \\\hline\end{array}$ 1.Use the retail inventory method to estimate the company's year-end inventory at cost. 2.A year-end physical count at retail prices yields a total inventory of $404,800.Prepare a calculation showing the company's loss from shrinkage at cost and at retail.

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Question 22

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Days' sales in inventory:

A) Is also called days' stock on hand.
B) Focuses on average inventory rather than ending inventory.
C) Is used to measure solvency.
D) Is calculated by dividing cost of goods sold by ending inventory.
E) Is a substitute for the acid-test ratio.

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Question 23

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Monarch Company uses a weighted-average perpetual inventory system and has the following purchases and sales: $\begin{array}{|l|l|}\hline \text { january } 1 & 20 \text { units were purchased at } \$ 10 \text { per unit. } \\\hline \text { January } 12 & 12 \text { units were sold. } \\\hline \text { january } 20 & 18 \text { units were purchased at } \$ 11 \text { per unit. } \\\hline\end{array}$ What is the value of cost of goods sold?

The overstatement of the ending inventory balance causes:

If a period-end inventory amount is reported in error,it can cause a misstatement in all of the following except:

Goods that are in transit and were shipped FOB shipping point should be included in the inventory records of the ________.

A company's total cost of inventory was $329,000 and its current replacement cost is $307,000.Under the lower cost or market,the amount reported should be $329,000.

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 Perpetual FIFO inventory valuation method,what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Goods in transit are included in a purchaser's inventory:

A company's inventory records indicate the following data for the month of January: If the company uses the last-in,first-out perpetual inventory system,what is the amount of cost of goods sold for January?

Goods on consignment are goods that are shipped by the owner,called the ________,to another party called the ________ that will sell the goods for the owner.

Since an error in the period-end inventory causes an offsetting error in the next period:

Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used?

IFRS reporting currently does not allow which method of inventory costing?

A company made the following merchandise purchases and sales during the month of May: $\begin{array} { | l | l | l | l | } \hline \text { May 1 } & \text { Purchased } & 380 \text { units at } & \$ 15 \text { each } \\\hline \text { May 5 } & \text { Purchased } & 270 \text { units at } & \$ 17 \text { each } \\\hline \text { May 10 } & \text { Sold } & 400 \text { units at } & \$ 50 \text { each } \\\hline \text { May 20 } & \text { Purchased } & 300 \text { units at } & \$ 22 \text { each } \\\hline \text { May 25 } & \text { Sold } & 400 \text { units at } & \$ 50 \text { each } \\\hline\end{array}$ There was no beginning inventory.If the company uses the periodic weighted average method,what would be the cost of the ending inventory?

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements.The following information is available: Beginning inventory,January 1: $4,000 Net sales: $80,000 Net purchases: $78,000 The company's gross margin ratio is 25%.Using the gross profit method,the cost of goods sold would be:

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

Beckenworth had cost of goods sold of $9,421 million,ending inventory of $2,089 million,and average inventory of $1,965 million.Its days' sales in inventory equals: (Use 365 days a year.)

A company must disclose any change in its inventory costing method in its financial statements.

Eastview Company uses a periodic LIFO inventory system,and has the following purchases and sales: What is the value of ending inventory?