Exam 13: Accounting for Merchandise Inventory

Match the terms with the definitions. -A method of estimating inventory in which a business's normal gross profit percentage is used to estimate the cost of goods sold and ending inventory.

The following data applies to a particular item of merchandise: On hand at start of period 300 \ 5.10 purchase 500 5.20 purchase 700 5.30 purchase 600 5.50 Number of units available for sale 2,100 On hand at end of period Number of units sold during period ? Of the 1,600 units sold during the period, 300 were from the beginning inventory; 500 from the first purchase; 600 from the second purchase; and 200 from the last purchase. Using the weighted-average costing method and rounding the average unit cost to the nearest whole cent, the cost of goods sold would be

Match the terms with the definitions. -Goods that are held by one business for sale but that are owned by another business.

Under the periodic inventory system, the merchandise inventory and the cost of goods sold for the current periods are determined

Match the terms with the definitions. -The cost to replace inventory at the prevailing purchase price.

Overstating the ending inventory causes the cost of goods sold to be overstated and net income to be understated.

Firms should report a loss due to write-down of inventory in the cost of goods sold account on the income statement.