Exam 15: Accounting for Merchandise Inventory

Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated(U), overstated(O), or correctly(C) stated for Year 2.

(Essay)

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Question 81

In a perpetual inventory system, Sales Returns and Allowances is credited when a sales return occurs.

(True/False)

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Question 82

An incorrect inventory figure will affect the balance sheet.

(True/False)

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Question 83

Prescott Plates uses a periodic inventory system. Prescott sold 35 dining sets during September. Other data for September include: Prescott sold 10 units from the Sept 1 balance, 15 from the Sept 6 purchase, and 10 from the Sept 12 purchase. Cost of Goods Sold under the Specific Invoice method is:

(Multiple Choice)

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Question 84

American Lumber has the following company information for October: goods available for sale at cost are $24,000, retail is $38,400, and sales at retail equal $30,400. Bert has a normal gross profit of 30%. The cost of estimated ending inventory under the gross profit method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 85

Emile Landscaping had the following data for April: The cost of the estimated inventory on April 30 under the retail method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

(Multiple Choice)

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Question 86

LIFO provides an up-to-date ending inventory on the income statement because it uses the latest purchases to calculate ending inventory.

(True/False)

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Question 87

Mack Industries uses the periodic inventory system. What is the entry to record a $450 merchandise purchase on account from Nickel Corporation?

(Multiple Choice)

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Question 88

Indicate the account(s) to be debited and credited to record the following transactions. -Sold merchandise in exchange for cash. - Periodic Debit Credit

(Multiple Choice)

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Question 89

LIFO reflects the oldest costs for inventory on the balance sheet.

(True/False)

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Question 90

A disadvantage of the FIFO method is that:

(Multiple Choice)

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Question 91

Which of the following items should NOT be included in merchandise inventory?

(Multiple Choice)

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Question 92

A company should use the specific invoice method to value items that are in large quantities and are low-cost goods.

(True/False)

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Question 93

Mack Industries uses the periodic inventory system. What is the entry to record a $300 sale on account to customer Jake Sanders, with a $100 cost of sale?

(Multiple Choice)

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Question 94

The weighted-average method assumes each item is assigned a different unit cost.

(True/False)

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Question 95

In a periodic inventory system, Purchases, Freight-In, and Purchases Returns and Allowances accounts are used.

(True/False)

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Question 96

A business uses the retail inventory method to estimate the value of the ending inventory. For the month of June, the cost of goods available for sale is $15,900 at cost and $22,100 at retail. The cost ratio is:

(Multiple Choice)

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Question 97

An understatement of ending inventory in one period results in:

(Multiple Choice)

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Question 98

Nicki's Pet Supply needs to estimate its ending inventory. Using the data below, compute Nicki's estimated cost of ending inventory for the month of April. Normal gross profit average 30%

(Essay)

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Question 99

The inventory method that matches most recently acquired costs with current selling prices is:

(Multiple Choice)

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Question 100

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Exam 15: Accounting for Merchandise Inventory

Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated(U), overstated(O), or correctly(C) stated for Year 2.

In a perpetual inventory system, Sales Returns and Allowances is credited when a sales return occurs.

An incorrect inventory figure will affect the balance sheet.

Prescott Plates uses a periodic inventory system. Prescott sold 35 dining sets during September. Other data for September include: Prescott sold 10 units from the Sept 1 balance, 15 from the Sept 6 purchase, and 10 from the Sept 12 purchase. Cost of Goods Sold under the Specific Invoice method is:

Emile Landscaping had the following data for April: The cost of the estimated inventory on April 30 under the retail method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

LIFO provides an up-to-date ending inventory on the income statement because it uses the latest purchases to calculate ending inventory.

Mack Industries uses the periodic inventory system. What is the entry to record a $450 merchandise purchase on account from Nickel Corporation?

Indicate the account(s) to be debited and credited to record the following transactions. -Sold merchandise in exchange for cash. - Periodic Debit ________ Credit ________

LIFO reflects the oldest costs for inventory on the balance sheet.

A disadvantage of the FIFO method is that:

Which of the following items should NOT be included in merchandise inventory?

A company should use the specific invoice method to value items that are in large quantities and are low-cost goods.

Mack Industries uses the periodic inventory system. What is the entry to record a $300 sale on account to customer Jake Sanders, with a $100 cost of sale?

The weighted-average method assumes each item is assigned a different unit cost.

In a periodic inventory system, Purchases, Freight-In, and Purchases Returns and Allowances accounts are used.

A business uses the retail inventory method to estimate the value of the ending inventory. For the month of June, the cost of goods available for sale is $15,900 at cost and $22,100 at retail. The cost ratio is:

An understatement of ending inventory in one period results in:

Nicki's Pet Supply needs to estimate its ending inventory. Using the data below, compute Nicki's estimated cost of ending inventory for the month of April. Normal gross profit average 30%

The inventory method that matches most recently acquired costs with current selling prices is:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Indicate the account(s) to be debited and credited to record the following transactions. -Sold merchandise in exchange for cash. - Periodic Debit Credit