Exam 6: Accounting for Merchandise Inventory

Table 6-5 Assume the following data for Kruger Sales for November 2019: Beginning inventory Nov. 1 5 units at \ 90 each Sale Nov. 3 3 units at \ 120 each Nov. 6 purchase 11 units at \ 95 each Sale Nov. 8 4 units at \ 120 each Sale Nov. 9 3 units at \ 120 each On November 30, a physical count reveals 6 units on hand. -Refer to Table 6-5. Calculate gross margin for Kruger Sales assuming the perpetual FIFO cost method is being used.

Table 6-5 Assume the following data for Kruger Sales for November 2019: Beginning inventory Nov. 1 5 units at \ 90 each Sale Nov. 3 3 units at \ 120 each Nov. 6 purchase 11 units at \ 95 each Sale Nov. 8 4 units at \ 120 each Sale Nov. 9 3 units at \ 120 each On November 30, a physical count reveals 6 units on hand. -Refer to Table 6-5. Calculate gross margin for Kruger Sales assuming the weighted-average cost method is being used and a periodic inventory system.

Table 6-6 Sam's Wholesale Bikes January 1 inventory balance 15 units at \ 350 per unit January 4 purchase 50 units at \ 375 per unit January 15 sale 40 units at \ 550 per unit February 8 purchase 80 units at \ 405 per unit February 15 sale 70 units at \ 550 per unit -Refer to Table 6-6. What is the cost of goods sold for the two months assuming that Sam's uses the perpetual weighted-average inventory method?

Table 6-6 Sam's Wholesale Bikes January 1 inventory balance 15 units at \ 350 per unit January 4 purchase 50 units at \ 375 per unit January 15 sale 40 units at \ 550 per unit February 8 purchase 80 units at \ 405 per unit February 15 sale 70 units at \ 550 per unit -Refer to Table 6-6. What is the gross margin for the two months assuming that Sam's uses the perpetual inventory FIFO inventory method?

An item is considered material if:

Using the FIFO method, the earliest purchases of inventory are assumed to be contained:

If a company uses periodic inventory and FIFO when prices are falling, the effect will:

Owners and managers of companies whose profits do not meet expectations are sometimes tempted to "cook the books" by manipulating the value of ending inventory.

It is necessary to do a physical count of inventory when using a perpetual inventory system.

Which of the following methods represents the most accurate cost?

Moving-weighted-average matches cost of goods sold to sales on the income statement better than FIFO.

The perpetual and periodic inventory systems will produce identical cost of goods sold and ending inventory balances using which of the following cost flow assumptions?

When applying the lower-of-cost-and-net-realizable-value rule to ending inventory valuation, net realizable value generally refers to the company's expected selling price for its inventory net of any selling costs.

Williams Company had the following balances and transactions during 2019. Reginning inventory 10 units at \ 70 June 10 Purchased 20 units at \ 80 December 30 Sold 15 units December 31 Rep lacement cost \ 60 What would the company's inventory amount be on the December 31, 2019 balance sheet if the perpetual FIFO method is used and the lower-of-cost-or-market-rule is applied?

When the FIFO method of inventory valuation is used, cost of goods sold is assumed to consist of the:

When the FIFO method is used, ending inventory is assumed to consist of the:

$\text { The following selected transactions for Nova Scotian Tire occurred in October. }$ Date Description Units Unit Cost Unit Selling Price Oct 1 Beginning Inventory 12 \ 164 1 Purchase 50 170 4 Sale 27 \ 270 Sale 23 270 Purchase 33 175 Sale 24 270 Purchase 31 190 280 30 Sale 24 280 1. Assuming that Nova Scotian Tire uses a perpetual inventory system, calculate cost of goods sold and ending inventory using: a)FIFO b)Moving weighted average. 2. Assuming that Nova Scotian Tire uses a periodic inventory system, calculate cost of goods sold and ending inventory using: a)FIFO b)Weighted Average. 3. Assuming that Nova Scotian Tire uses FIFO under a perpetual inventory system, calculate the gross margin for the month of October. 4. Assuming that Nova Scotian Tire uses FIFO under a perpetual inventory system, prepare a journal to record the October 30th sale on credit. 5. Nova Scotian Tire does a physical inventory count at the end of October and discovers 15 tires are missing from inventory. Prepare a journal entry to adjust inventory, assuming the company uses Weighted Average under a periodic inventory system.

The following data pertain to Cross Company (assume a perpetual inventory system)for the month ended January 31, 2019: Date Description Units Unit Cost Unit SellingPrice Jan. 1 Beg. Inventory 10 \ 50 5 Purchase 25 52 10 Sale (6) \ 80 16 Sale (10) 82 20 Purchase 12 55 25 Sale (20) 85 Required: 1. Compute the cost of goods sold and ending inventory under FIFO. 2. Compute Gross Margin under FIFO

Under moving-weighted-average cost method, the cost of goods sold is based on the oldest purchases.

Table 6-2 Manuary 1 inventory balance 100 units at \ 10 per unit March 2 purchase 50 units at \ 11 per unit July 8 purchase 80 units at \ 10 per unit November 15 purchase 30 units at \ 12 per unit On December 31, a physical count reveals 80 units in ending inventory. -Referring to Table 6-2, the cost of ending inventory using the periodic FIFO method would be: