Exam 8: Inventories: Special Valuation Issues

The accountant for the Issenock Company did not record a purchase of merchandise on credit for the current year, but the merchandise was correctly included in the ending inventory. Assuming a periodic inventory system, how would assets, liabilities, and retained earnings be affected on the year-end balance sheet?

A company using the periodic inventory system to record the reduction of inventory to NRV would record the following journal entry to record inventory at market using the allowance method:

When comparing the lower of cost to market rule under any of the methods

The Jamison Company's inventory was destroyed on July 4, 2016, when its warehouse caught on fire early in the morning. Inventory was totally destroyed. The accounting records, which were located in a fireproof vault, contained the following information: Using the gross profit method, what is the estimated cost of the inventory that was destroyed by the fire?

Caroline's Music Store uses the average cost retail inventory method to determine its ending inventory. The accounting records for the current year for Caroline's contained the following information: What is the cost-to-retail percentage to be used for ending inventory calculations?

After the auditors counted the inventory of the Cracker Jack Manufacturing Co. and reviewed the accounting records something appeared to be amiss. Inventory that was counted totaled $ 295,000. Using the gross profit method, what did the auditors estimate as the amount of the inventory that should have been on hand at December 31, 2016?

Laura's Homemade cannot decide which inventory method to use to determine its ending inventory. The accounting records for the current year contain the following information: Compute the cost of inventory under the following cost flow assumptions. 1) LIFO 2) Average Cost

Which of the following is not a general assumption that underlies the retail inventory method?

Given the following information for Miller, Inc.: Sales 56,700 Required: a. Determine the inventory value using the retail inventory method and the FIFO cost flow assumption. Round off any decimals to two places. b. Determine the inventory value using the retail inventory method and the lower of average cost or market cost flow assumption.

Exhibit 8-2 The Dormer Company uses the gross profit method to estimate its inventory in interim financial statements. The markup on cost is 50%. The following information is available: -Refer to Exhibit 8-2. The estimated cost of goods sold at January 31, 2016, is

Which of the following variations of the retail inventory method would generally result in the lowest cost-to-retail ratio in a period of declining prices?

Exhibit 8-2 The Dormer Company uses the gross profit method to estimate its inventory in interim financial statements. The markup on cost is 50%. The following information is available: -Refer to Exhibit 8-2. The estimated inventory at January 31, 2016, is

The Slayton Company uses a periodic inventory system and values its inventory at lower of cost or NRV. Its accounting records indicate the following information relating to inventory: Prepare the required journal entries at December 31, 2019, and December 31, 2020, to record the inventory at lower of cost or market using the following methods: a. Direct method b. Allowance method

Bennett Company's accountant made the following errors related to merchandise inventory in 2016: 1) The beginning inventory for 2016 was overstated by $1,900 due to an error in the physical count. 2) A $1,150 purchase of merchandise on credit was not recorded, but the items were included in the ending inventory. Assuming a periodic inventory system, Bennett Company's 2016 cost of goods sold will be

The Alexandra Company uses the retail inventory method and the average cost flow assumption for preparation of its interim reports. Information about Alexandra's inventory in the second quarter of 2016 is shown below: What is the estimated cost of Alexandra's inventory on June 30, 2016?

The purpose of dollar-value LIFO retail method is to eliminate the effects of price changes during a period.

Concerning application of the lower of cost or market method under either the LIFO or retail inventory method, which one of the following statements is true regarding the constraints on market value?

Kelcie Sports uses the dollar-value LIFO retail method. The price index on January 1, 2016, was 100, and on that date the inventory was $20,000 retail) and $14,000 cost). Additional information follows: What is the cost of the December 31, 2017, inventory to the nearest dollar)?

The Sherri's Retail Shop uses the FIFO retail inventory method to determine its ending inventory. The accounting records for the current year for Sherri's contained the following information: What is the cost-to-retail percentage to be used for ending inventory calculations?

Which of the following is a justification for valuing inventory above historical cost?