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Exam 8: Inventories and the Cost of Goods Sold

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Question 31

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[The following information applies to the questions displayed below.] Beech Soda,Inc.uses a perpetual inventory system.The company's beginning inventory of a particular product and its purchases during the month of January were as follows: On January 14,Beech Soda,Inc.sold 25 units of this product.The other 28 units remained in inventory at January 31. -Assuming that Beech Soda uses the FIFO cost flow assumption,the cost of goods sold to be recorded at January 14 is:

A) $278.
B) $268.
C) $393.
D) $673.

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Question 32

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Which of the four inventory approaches is best suited to inventories of high-priced,low-volume items?

A) LIFO
B) FIFO
C) Average cost.
D) Specific identification

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Question 33

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Colonial uses the retail method to estimate its monthly cost of goods sold and month-end inventory.At August 31,the accounting records indicate the cost of goods available for sale during the month (beginning inventory plus purchases) totaled $270,000.These goods had been priced for resale at $675,000.Sales in August totaled $450,000.The estimated inventory at August 31 is:

[The following information applies to the questions displayed below.] Harding Systems,Inc.uses a periodic inventory system.The purchases of a particular product during the year are shown below: At December 31 the ending inventory consisted of 1,500 units. -Compute the cost of the ending inventory based on the average-cost method of inventory valuation.(Round your final answer to the nearest dollar value. )

The primary reason a physical inventory is taken is to:

Which of the following inventory approaches is not in accord with the physical flow of merchandise in most businesses?

The inventory method used by a company will affect profitability by affecting the amount of income tax a company owes.

A physical inventory is usually taken during a period of high activity.

Assume ending inventory is overstated at the end of Year 1 and correctly stated at the end of Year 2.Owners' equity will be correctly stated at the end of Year 2.

[The following information applies to the questions displayed below.] Castle TV,Inc.purchased 1,000 monitors on January 5 at a per-unit cost of $185,and another 1,000 units on January 31 at a per-unit cost of $230.In the period from February 1 through year-end,the company sold 1,800 units of this product.At year-end,200 units remained in inventory. -Assume that Castle TV,Inc.uses the LIFO flow assumption.The cost of the 200 units in the year-end inventory is:

[The following information applies to the questions displayed below.] Soriano Company had net sales of $300,000 for the month (after returns and allowances of $1,500 and sales discounts of $3,250) .Beginning inventory for the month was $60,000;purchases for the month were $175,000;and gross profit was 43%. -Refer to the information above.What were the goods available for sale for the month?

Periodic inventory systems Funky Fashions uses a periodic inventory system.The beginning inventory of a particular product,and the purchases during the current year,were as follows: At December 31,the ending inventory of this product consisted of 1,300 units. Determine the cost of the year-end inventory and the cost of goods sold for this product under each of the following methods of inventory valuation:

Busch,Inc.is a successful company,but has a lower inventory turnover rate than the industry average.Of the following,the most likely explanation is that Busch:

[The following information applies to the questions displayed below.] Soriano Company had net sales of $300,000 for the month (after returns and allowances of $1,500 and sales discounts of $3,250) .Beginning inventory for the month was $60,000;purchases for the month were $175,000;and gross profit was 43%. -Refer to the information above.What were the gross sales for the month?

When prices are increasing,which inventory method will produce the highest cost of goods sold?

In a perpetual inventory system,the flow of inventory cost is:

In a periodic inventory system,understating the amount of ending inventory will cause an understatement of gross profit in the current year.

The specific identification method is more appropriate than a cost flow assumption method:

[The following information applies to the questions displayed below.] Soriano Company had net sales of $300,000 for the month (after returns and allowances of $1,500 and sales discounts of $3,250) .Beginning inventory for the month was $60,000;purchases for the month were $175,000;and gross profit was 43%. -Refer to the information above.What was the cost of goods sold for the month?

A clothing store would logically have a higher inventory turnover rate than would a doughnut shop.