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Exam 6: Merchandise Inventory

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Question 91

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Handbags Company had 500 units of inventory on hand at the end of the year.These were recorded at a cost of $18 each using the last-in,first-out (LIFO) method.The current replacement cost is $15 per unit.The selling price charged by Handbags Company for each finished product is $23.In order to record the adjusting entry needed under the lower-of-cost-or-market rule,the Cost of Goods Sold will be ________.

A) debited by $7,500
B) credited by $7,500
C) debited by $1,500
D) credited by $1,500

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Question 92

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When using the periodic inventory system and weighted-average inventory costing method,when is the weighted average cost per unit computed?

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When using the periodic inventory system...

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Question 93

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Using the LIFO method of inventory valuation will always produce the same results for cost of goods sold and ending inventory whether a company uses perpetual or periodic inventory costing methods.

Under the weighted-average method for inventory costing,the cost per unit is determined by ________.

List and briefly discuss three measures that can be taken to maintain good controls over merchandise inventory.

Smart Phones Company had the following balances and transactions during 2019. The company maintains its records of inventory on a perpetual basis using the last-in,first-out inventory costing method.Calculate the amount of ending Merchandise Inventory at December 31,2019 using the lower-of-cost-or-market rule.(Round any intermediate calculations two decimal places,and your final answer to the nearest dollar. )

Nichols Company had the following balances and transactions during 2018: What would be reported for Ending Merchandise Inventory on the balance sheet at December 31,2018 if the perpetual inventory system and the first-in,first-out inventory costing method are used?

Which of the following inventory costing methods yields the highest cost of goods sold during a period of rising inventory costs?

Maintaining good controls over merchandise inventory ensures that inventory purchases and sales are properly authorized and accounted for by the accounting system.

Everyday Wear Retail had the following balances and transactions during 2018: The company maintains its records of inventory on a perpetual basis using the first-in,first-out inventory costing method.Calculate the amount of ending Merchandise Inventory on December 31,2018 using the lower-of-cost-or-market rule.

Which of the following states that the business should use the same accounting methods from period to period?

Southwood Motors is considering which inventory costing method it should use.The business wants to maximize gross profit during a period of rising costs.Which inventory method should Southwood select? Discuss your selection.

Ralwins Company had the following balances and transactions during 2018,from January 1 to December 31: What would be reported for ending Merchandise Inventory on the balance sheet at December 31,2018 if the perpetual inventory system and the weighted-average inventory costing method are used? (Round unit costs to two decimal places and total costs to nearest dollar. )

A company that uses the periodic inventory provides the following information: 1.Beginning Inventory $15,000 2) Net Purchases $93,000 At the end of the period,the physical count of inventory reveals that $13,000 of inventory is on hand. What is the amount of cost of goods sold?

When using the weighted-average inventory costing method,the dollar amounts for ending inventory and cost of goods sold are the same for both the perpetual and periodic inventory costing methods.

A company decides to ignore a very small error in its inventory balance.This is an example of the application of the ________.

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $9,000 and paid $780 for the freight-in.The company sold the whole lot to a supermarket chain for $12,000 on account.The company uses the specific-identification method of inventory costing.Which of the following entries correctly records the cost of goods sold?

The last-in,first-out (LIFO)costing system may or may not match the physical flow of goods.

Under which of the following inventory costing methods is the ending inventory based on the costs of the most recent purchases?

The lower-of-cost-or-market value (LCM) rule ________.