Exam 6: Inventories

An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is

The following information is available for Park Company at December 31, 2010: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $900,000; and sales $1,200,000. Park's inventory turnover in 2010 is

Speer's Hardware Store prepared the following analysis of cost of goods sold for the previous three years: Net income for the years 2007, 2008, and 2009 was $70,000, $60,000, and $55,000, respectively. Since net income was consistently declining, Mr. Speer hired a new accountant to investigate the cause(s) for the declines. The accountant determined the following: 1. Purchases of $25,000 were not recorded in 2009. 2. The 2009 December 31 inventory should have been $24,000. 3. The 2010 ending inventory included inventory costing $5,000 that was purchased FOB destination and in transit at year end. 4. The 2011 ending inventory did not include goods costing $4,000 that were shipped on December 29 to Sampson Plumbing Company, FOB shipping point. The goods were still in transit at the end of the year. Instructions Determine the correct net income for each year. (Show all computations.)

The lower-of-cost-or-market basis of valuing inventories is an example of

Disclosures about inventory should include each of the following except the

Freight terms of FOB shipping point mean that the

In a period of rising prices, the costs allocated to ending inventory may be understated in the

Wade Company prepares monthly financial statements and uses the gross profit method to estimate ending inventories. Historically, the company has had a 40% gross profit rate. During June, net sales amounted to $60,000; the beginning inventory on June 1 was $18,000; and the cost of goods purchased during June amounted to $27,000. The estimated cost of Wade Company's inventory on June 30 is

Unitech has the following inventory information. A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the average-cost method, the value of ending inventory is

Linville Company had beginning inventory on May 1 of $12,000. During the month, the company made purchases of $30,000 but returned $2,000 of goods because they were defective. At the end of the month, the inventory on hand was valued at $9,500. Calculate cost of goods available for sale and cost of goods sold for the month.

The specific identification method of inventory costing

At May 1, 2010, Deitrich Company had beginning inventory consisting of 100 units with a unit cost of $7. During May, the company purchased inventory as follows: 200 units at $7 300 units at $8 The company sold 500 units during the month for $12 per unit. Deitrich uses the average cost method. The average cost per unit for May is

Graham Company uses a periodic inventory system. Details for the inventory account for the month of January, 2010 are as follows: An end of the month (1/31/10) inventory showed that 120 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

When valuing ending inventory under a perpetual inventory system, the

The LIFO inventory method assumes that the cost of the latest units purchased are

The controller of Scheller Company is applying the lower-of-cost-or-market basis of valuing its ending inventory. The following information is available: Instructions Compute the value of the ending inventory by applying the lower-of-cost-or-market basis.

Euler Company made an inventory count on December 31, 2010. During the count, one of the clerks made the error of counting an inventory item twice. For the balance sheet at December 31, 2010, the effects of this error are

Under a consignment arrangement, the

Kershaw Bookstore had 500 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows: Kershaw does not maintain perpetual inventory records. According to a physical count, 375 units were on hand at January 31. The cost of the inventory at January 31, under the FIFO method is:

Oakley Supply Company reports net income of $120,000 in 2010. The ending inventory did not include goods valued at $5,000 that Oakley had consigned to Roberta's Gift Shop. (1) What is the correct net income for 2010? (2) What impact will this error have on the balance sheet at 12/31/10?