Exam 6: Inventory Costing and Valuation

Rudd Company made the following merchandise purchases during the current year: There was no beginning inventory, but ending inventory consisted of 400 units. If Rudd uses the weighted-average cost method and the periodic inventory system, what would be the cost of the ending inventory?

Bella Ltd. is a calendar-year corporation. Bella uses a periodic inventory system. Its financial statements for 2017 contained errors as follows: -Assume the 2017 errors are not discovered in 2018. Ending inventory at the 2018 year end is properly stated. By how much will 2018 net income be over or understated?

Net realizable value for damaged or obsolete goods is sales price plus the cost of making the sale.

Evaluate each inventory error and determine whether it overstates or understates each item.

Harlingen Store uses the retail method and has the following information available concerning their most recent accounting period: (1)What is the cost ratio using the retail method?(2)What is the estimated cost of the ending inventory?

Bethel Coon an item by item basis.

The principle of faithful representation:

Toys "R" Ltd. had cost of goods sold of $6,000 million, ending inventory of $2,500 million, and average inventory of $2,000 million. The merchandise turnover is:

Goods in transit are automatically included in inventory.

Days' sales in inventory is calculated by:

The retail inventory method of estimating inventory can be used to estimate the amount of inventory shortage if a physical count is also done.

Patel Packing had the following information for its inventory: Beginning inventory: cost $107,000; retail $130,000 Net purchases: cost $58,000; retail $120,000Sales at retail: $145,000What is the estimated cost of the ending inventory?

What special cases are sometimes seen when dealing with ownership of merchandise inventory?

Management must include which of the following considerations when accounting for inventory:

Costs included in the value of inventory are:

To avoid the time-consuming process of taking an inventory each month, some companies use the gross profit method to estimate ending inventory.

The consistency principle helps ensure that financial statements are comparable across periods.

A company's store was destroyed by a fire on February 10Inventory, January 1PurchasesSales: $140,000The company's gross profit rate was 30%. Calculate the estimated value of the destroyed inventory.

Bella Ltd. is a calendar-year corporation. Bella uses a periodic inventory system. Its financial statements for 2017 contained errors as follows: -By how much will net income for 2017 be over or understated?

Would an entry be needed if the calculation of LCNRV was made on a group basis? If so, make the entry. If not, state why.